Marc Lusebrink, sole proprietor of Oak Company, bought a used automobile and drove it 6,000 miles through June 30, 2022 and another 7,000 miles during the remainder of the year, all for business purposes. Total miles (including business miles) is 16,000. His total expenses for his automobile for the year are:

Line Item Description	Amount
Gasoline	$2,061
Oil changes	92
Insurance	1,030
Tires	225
Repairs	620
Total	$4,028

The automobile cost $20,000 on January 1, and depreciation expense for the year, including business use, was $4,000. His business parking and toll fees for business amount to $327.

Calculate Marc's transportation expense deduction for the year under each method listed below.

Round business use to the two decimal percentages. If required, round your answers to the nearest dollar.

Standard Mileage Method: _____

Actual Cost Method: _____

Which method should Marc use?

Feedback

Certain transportation expenses for business purposes are deductible by taxpayers. Taxpayers may deduct the actual business-related expenses of transportation, or they may be entitled to use a standard mileage rate to calculate their deduction for transportation costs. The standard mileage rate is normally adjusted each year. Most costs associated with the operation of an automobile, such as gasoline, oil, insurance, repairs, and maintenance, as well as depreciation, are built into the standard mileage rate.

Standard mileage rates for using a vehicle, van, pickup, or panel truck for business purposes is 58.5 cents per mile beginning Jan 1, 2022. From Jul 1, 2022 the rate increases with 4 cents to 62.5 cents per mile for business purposes.

ACTUAL ANSWER IS:

Marc's transportation deduction is the greater of his actual costs or his deduction using the standard mileage method