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This addresses IRS mileage rates.

Please see attachment. My question is why did he use those rates highlighted in red.

Margaret started her own business in the current year and will report a profit for her first year. Her results of operations are as follows:
Gross income $50,000
Travel $1,000
Transportation 6,173 miles, using standard mileage method
Entertainment in total $4,000
Seven gifts at $50 each $350
Rent and utilities for apartment in total $10,000
(20% is used for a home office)
What is the net income Margaret should show on her Schedule C? Show the calculation of her taxable business income.

Gross income $50,000
Travel $ 1,000
3,115 miles x 50.5 cents $ 1,573
3,115 miles x 58.5 cents $ 1,822
Entertainment in total $4,000 x 50% $ 2,000
7 gifts at $50 each, limited to $25 $ 175
Rent and utilities allocated to home office $ 2,000
20% x $10,000
Total Expenses $ 8,570
Taxable Business Income $41,430


Solution Preview

Your professor used those rates because this must be a problem from the year 2008 or the ...

Solution Summary

The solution explains IRS mileage rates and how they are used.