6.22- For the current year, Al Johnson used his personal car for both business and personal purposes. He bought the car this year for $34,200. He drove 18,000 miles in the car during the year: 10,000 miles were for business-related purposes and 8,000 miles were for personal purposes. He incurred the following car expenses during the year: Expense

Amount

Gas

$7,900

Maintenance

900

Repairs and depreciation

900

Car washes

500

Total

$10.200

Based on this information, what part of the above car expenses is deductible as business-related expenses on Al's current year income fax return? Al operates a sole proprietorship.

6.23- Refer to the facts in Problem 22. Assuming that Al uses the mileage rate to compute his auto expenses, what is Al's remaining tax basis in the car at the end of the year?

6.22

BIZ MI	10,000		%	*
PERS MI	8,000			*
TOT MI	18,000
			(Type %)
		TOTS	BIZ		PERS
	GAS	7,900		*
	R&M	900		*
	CAR WASH	900		*
	TOT	500		*
	TOTALS			*
CAR DEPR - MACRS		34,200		*
	SEC 179	18,200		*
TOTAL DEDNS - MACRS				*
TOTAL DEDNS - SEC 179				*
6.23	MILEAGE	10,000	0.585	=

31. For the current month, Jackson Cement Co.

incurred payroll expenses as follows: Gross salaries and wages Payroll taxes: OASDI (Social Security Tax)-employer's share HI (Medicare tax)-employer's share

$675,000

41,850

Amounts withheld and paid to the government:

Employee income taxes withheld

OASDI-employees' share

HI--employees' share

9,788

726,638

(108,990)

(41,850)

(9,788)

a.

What amount can Jackson claim as a tax deduction for salary and wage expense?

How much can Jackson deduct as tax expense?

SAL		675,000
P/R TAXES
	SOC -ER	41,850
	MED - ER	9,788
TOT P/R (SAL+TXS)				*
	FED	(108,990)
	SOC -EE	(41,850)
	MED - EE	(150,840)
TOT WH				*
a		AMT CAN CLAIM AS TAX DEDUCTION?
b		AMT DEDUCTED AS TAX EXP?