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    This addresses IRS mileage rates.

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    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

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    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.