Question
1Josh borrowed $50,000 from the First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over
1Josh borrowed $50,000 from the First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $4,200 on the borrowed funds, but he received $3,500 of interest on the bonds. What amount (if any) that Josh can deduct as an ordinary and necessary business deduction?
2. Josh paid his brother, a mechanic, $3,600 to install a robotic machine for Joshs business. The amount he paid to his brother is comparable to what he would have paid to an unrelated party to do the same work. Once the installation was completed by his brother, Josh began calibrating the machine for operation. However, by the end of the year, he had not started using the machine in his business. What amount (if any) that Josh can deduct as an ordinary and necessary business deduction?
3.Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,400 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 12,000 miles (combination of business and personal travel). Ryan can provide written documentation of the business purpose for trips totaling 3,000 miles. If Ryan does not use the standard mileage rate, what business expense amount can Ryan deduct (if any) for these trips?
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