Chelsea, Who Is Self-Employed, Drove Her Automobile a Total of 20,000

question 77

Multiple Choice

Chelsea, who is self-employed, drove her automobile a total of 20,000 business miles in 2014. This represents about 75% of the auto's use. She has receipts as follows: Chelsea has an AGI for the year of $50,000. Chelsea uses the standard mileage rate method. After application of any relevant floors or other limitations, she can deduct

• A)$10,900.
• B)$11,900.
• C)$11,750.
• D)$12,900.

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Definitions:

Operating Activities

Activities directly related to the core business operations, including cash flows from sales, services, and the costs of doing business, reflected on a company's cash flow statement.

Income Taxes

Taxes levied by the government on the income generated by individuals or entities.

Indirect Method

A way of calculating cash flow from operating activities by starting with net income and adjusting for changes in non-cash balance sheet items.

Financing Activities

Transactions that involve raising funds for the company, including issuing debt, issuing equity, and paying dividends.