This Year Clark Leased a Car to Drive Between His

question 80

Multiple Choice

This year Clark leased a car to drive between his office and various work sites. Clark carefully recorded that he drove the car 23,000 miles this year and paid $7,200 of operating expenses ($2,700 for gas, oil, and repairs, and $4,500 for lease payments) . What amount of these expenses may Clark deduct as business expenses?

• A)$7,200
• B)Clark cannot deduct these costs because taxpayers must use the mileage method to determine any transportation deduction.
• C)$4,500
• D)$2,700
• E)Clark is not entitled to any deduction if he used the car for any personal trips.

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Definitions:

Adverse Selection

A situation in which asymmetrical information leads to the selection of suboptimal market participants, often seen in insurance markets where those most likely to make a claim are also most likely to seek insurance.

Market Signals

Information or indicators that suggest the future direction of market prices, helping investors and businesses make decisions.

Uncertainty

The state of having limited knowledge where it is impossible to exactly describe existing states, outcomes, or future events.

Individual Mandate

A requirement for individuals to have health insurance or pay a penalty, originally a key provision of the Affordable Care Act.