Problem
Research the following issues: the taxability of earnings when no Form 1099-K is received (i.e., earnings are lower than the amount required to be reported on the Form 1099-K), the deductibility of business miles versus charitable miles, the two methods for computing vehicle deductions for business use, and the requirements for record-keeping under each method. Write a technical tax memorandum for the file documenting your analysis and conclusion regarding the proper tax treatment for each issue identified above. Be sure to include in the memorandum which method for computing vehicle deductions for business use is more beneficial for Sam given the information provided for the current year (Exhibit A & instructor provided Supplemental Information Year 1). Your analyses should cite primary authoritative sources to support your conclusions. If secondary sources are utilized, primary sources from which those are derived should be cited.
Write a client letter to Sam providing your recommendation regarding vehicle deductions for business use.