Question

In 2020, Ensley drove her automobile 28,500 miles. She incurred the following expenses during the year related to the automobile: Gas and oil, lubrication: $1,800 Insurance: $980 Repairs: $360 Licenses and registration fees: $50 Business parking and tolls: $170 She uses the automobile 80% for business. Based on the data, Ensley's automobile deduction under the actual cost method is $fill in the blank 1.

Answer 1

Answer: $2722

Explanation:

Ensley's automobile deduction under the actual cost method is calculated below:

Gas and oil = $1800

Add: Insurance = $980

Add: Repairs = $360

Add: Licenses and registration fees = $50

Total Expenses = $3190

We then calculate the business usage which will be:

= 80% of $3190

= 0.8 × $3190

= $2552

We then add the cost of business parking and tolls, then the total deduction will be:

= $2552 + $170

= $2722