Ask Question
25 June, 08:21

Alvin is a self-employed sound technician who reports on the cash method and calendar year. Alvin has a shop in Austin, Texas, but he spends much of his time away from his shop traveling to and from various concerts around the country. Alvin leases a truck to move his equipment around the country and this year he spent $12,000 in lease payments and paid $18,000 for gas, oil, and repairs. Alvin keeps records of his personal use of the truck and he estimates that 6,000 of the total 36,000 miles put on the truck this year were for personal trips. What amount of these expenses may Alvin deduct as business expenses?

+1
Answers (1)
  1. 25 June, 11:06
    0
    Business expense is $25,000

    Explanation:

    Business related cost incurred by Alvin should be a proportion of the total cost. We need to estimate business related percentage of his activities and allocated business expense appropriately.

    Alvin used an estimated 6,000 miles on his truck for personal use out of a total of 36,000 miles.

    The percentage of business related miles = (36,000-6,000) / 36,000 = 0.833333

    Total expenses = Cost of lease + Cost of gas, oil, and repairs

    Total cost = 18,000 + 12,000 = $30,000

    Business expense = Percent of business related cost * Total cost

    Business expense = 0.8333333 * 30,000

    Business expense = $24,999.99~ $25,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Alvin is a self-employed sound technician who reports on the cash method and calendar year. Alvin has a shop in Austin, Texas, but he ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers