Question

This year, Clark leased a car to drive between his office and various work sites. Clark carefully recorded that he drove the car 23,000 miles this year and paid $7,200 of operating expenses ($2,700 for gas, oil, and repairs, and $4,500 for lease payments). What amount of these expenses may Clark deduct as business expenses?a) $7,200.b) Clark cannot deduct these costs but he must use the mileage method to determine any deduction.c) $4,500.d) $2,700.e) Clark is not entitled to any deduction if he used the car for any personal trips.

Answer 1

Answer:

The total amount of expenses Clark can deduct as business expenses:

a) $7,200

Explanation:

The total deductible business expenses can be expressed as;

T=O+L

where;

T=Total deductible business expenses

O=operating expenses

L=lease payments

In our case;

T=unknown

O=$2,700

L=$4,500

replacing;

T=2,700+4,500=7,200

The total amount of expenses Clark can deduct as business expenses=$7,200