Homework SourseJuan uses his personal vehicle in his sole proprietorship He
Juan uses his personal vehicle in his sole proprietorship. He keeps no records of any kind regarding his business use of the car and doesn\'t really know for certain when and where he used the automobile for business. Which of the following is correct? *
| Juan should deduct a good-faith estimate of his expenses for the auto as a business expenses. | |
| Juan should estimate his total vehicle expenses for the year, then deduct 50% of that amount as business expense. | |
| Juan could have leased a comparable vehicle for $3,600 for 2016. Therefore, he should deduct $3,600 as a business expense. | |
| Juan cannot deduct any vehicle expenses because he has no record of his expenses. | |
Solution
As per IRS deduction rule, for a proprietor to take a deduction of use of the personal vehicle for business purposes, keeping the documents and details of the business use of the vehicle are required to support the deduction claim.
Hence, in this case, the proprietor cannot deduct any expenses as he has no record of expenses.
Thus the fourth option is correct.
