Problem
Mandy is an employee who must use her personal automobile for employment-related business trips. During 2016, Mandy drives her car 70% for business use and incurs the following total expenses (100% use of car):
Gas and oil $14,000 Repairs 2,600 Depreciation 4,900 Insurance and license fees 1,400 Parking and tolls (business related) 50 Total $22,950 Mandy drives her car a total of 20,000 miles (14,000 business miles) during 2016 and receives a reimbursement of 40 cents per mile from her employer. Assume that an adequate accounting is made to Mandy's employer.
1. What amount is deductible (before the 2% nondeductible floor) if Mandy uses the standard mileage method?
2. What amount is deductible (before the 2% nondeductible floor) if Mandy uses the actual cost method?