om 2106

Department of the Treasury
Internal Revenue Service

Employee Business Expenses

> Attach to Form 1040.

| 1077

Your name

Social security number

Occupation in which expenses were incurred

Employer's name >...

Employer's address p>

Instructions

Include all expenses you paid as an employee,
or expenses you charged to your employer (for
example, through use of credit cards), or ex-
penses for which you received an advance, al-
lowance, or reimbursement.

Travel and Transportation.—You can deduct
bus, taxi, plane, train fares, and the cost of
using your car in your work.

If you use your own car for business reasons,
you can deduct what it cost you for business
use. Instead of figuring your actual expenses
such as gas, oil, repairs, license tags, insurance,
and depreciation, you'may prefer’ to take a
standard mileage rate.

This is figured at 17 cents a mile (15 cents a
mile for taxable years beginning after 1973 and
before 1977) for the first 15,000 miles and 10
cents for each mile over 15,000. Add to this
amount the business portion ‘of automobile in-
terest and State and local taxes (other than
gasoline), parking fees, and tolls. (The nonbusi-
Ness portion of interest and State and local
taxes (including gasoline) may be deducted as
an itemized deduction if you elect to itemize
your deductions). For automobiles that have
been or are considered fully depreciated under
the straight-line method of depreciation, the
standard mileage rate is 10 cents a mile for all
business mileage.

To determine if your automobile has been
fully depreciated under the straight-line method
of depreciation, apply the following rule.

If you use the optional method of computing
operating cost of an automobile for the entire
length of time that you use the automobile for
business purposes, such period of time is the
actual useful life of the automobile to you. The

automobile will not be considered to have be-
come fully depreciated until the end of such
useful life. However, if at any time during the
period that you use the automobile for business
purposes you computed and deducted the actual
Costs of all operating and fixed cost of the auto.
mobile for business purposes, the useful life of
the automobile to you will be the estimated
period on which you based your computation of
the allowable straight-line depreciation deduc-
tion for the year. Thereafter, regardless of
whether you use the actual cost method or the
optional method for subsequent taxable years,
the automobile will be considered fully depre-
ciated at the end of the period estimated to be
its useful life to you.

‘The use of the optional method is limited to a
self-employed individual or an employee who op-
erates only one automobile at a time for busi-
ness purposes. If you alternate in using different
automobiles on different occasions for business
purposes or replace your automobile during the
year, the standard mileage rate applies to the
combined total business mileage of the auto-
mobiles, as if they were one, to arrive at a
deduction.

The optional method cannot be used if you
have claimed depreciation in a prior year using
a method other than straight-line (or if you have
claimed additional first-year depreciation), use
the automobile for hire, such as taxicabs, or two
or more automobiles used at the same time,
such as in fleet operations,

Use of the optional method will not prevent
you from claiming an investment credit so long
as you can properly establish that the useful life
gf tae automobile Is st least 3 years (see Form

Meals and Lodging.—You can deduct these
if you were temporarily away from home on busi-

ness. Your “home” for this purpose is your
principal or regular post of duty. You cannot
deduct the cost of meals on daily trips where
you did not need sleep or rest.

Outside Salesperson.—in addition to the
above, an outside salesperson can generally de-
duct other expenses necessary in sales work,
for example, selling expenses, stationery, and
postage. An outside salesperson is one who does
il selling away from the employer's place of
Business. if your main duties are service and
delivery, such as a milk driver-salesperson, you
are not considered an outside salesperson.

Other Business Expenses.—If you itemize de-
ductions on Schedule A, you can also deduct
other business expenses under the heading
“Miscellaneous deductions.” Examples of these
expenses are dues to unions and professional
organizations and the cost of tools, materials,
etc., that your employer did not pay for.

Limitations apply to deductions relating to
the use of your home for business purposes.
Under these rules, you must use a portion of
your home as an office exclusively on a regular
basis in connection with your employer's trade
or business and for the convenience of your em-
Plover to be able to deduct the expenses alloca-

Je to that portion. For more information, see
Publication 587, Business Use of Your Home.

There is a limitation on the amount of ex-
penses that can be deducted for transportation,
meals, lodging, etc. for attending no more than
two foreign conventions during the taxable year.

For a detailed explanation of the rules for
deductions for travel, entertainment, and gift ex-
penses, see Publication 463, Travel, Entertain-
ment, and Gift Expenses.

Use Form 3903 to compute any moving ex-
pense deduction.

PART I.—Employee Business Expenses Deductible in Computing Adjusted Gross Income on Form 1040, Line 31

1 Airplane, boat, railroad, etc., fares. .
2 Meals and lodging. . . . . . « e
3 Automobile expenses (from Part IV). .

4 Other (specify) (Include expenses not listed on lines 1 through 3 to extent of reimbursement) >...

5 Total of lines 1 through 4. .

6 Less: Employer's payments for above expenses (other than ‘amounts included on Form W-2). . . « «+

7 Excess expenses (line 5 less line 6). Enter here and include on Form 1040, line 23. .
8 Excess payments (line 6 less line 5). Enter here and include on Form 1040, line 20.

PART II.—Employee Business Expenses which are Deductible if You Itemize Deductions on Schedule ry 1. 1040)

1 Business expenses other than those included above (specify) >.

2 Total. .

If you itemize your deductions, deduct under Miscellaneous Deductions, Schedule A (Form 1040),

PART 1II.—Additional Information to be Furnished When Claiming a Deduction for Educational Expenses

1 Name of educational institution or activity
2 Address >.

>.

3 Were you required to undertake this education to meet the minimum educational requirements to qualify in your

employment, trade or business? . . -

4 Will the study program undertaken qualify you for a new trade or business?’ . . .
5 If your answer to question 3 or 4 is No, state the reason for obtaining the additional education and show the relationship between the

courses taken and your employment during the period >.

-O Yes [] No
-( Yes [] No

235-131-1

Form 2106 977)


Form 2106 (1977)

Page 2

PART 1V.—Automobile Expenses (Use either the regular or the optional method.)

Automobile 1 Automobile 2 Automobile 3
A. Months automobile held for businessuse. . . . » « - months months months
B. Total mileage for months inA . . Pee er oe miles miles miles
C. Portion of total mileage applicable to business Sa miles miles miles
Regular Method: (Include expenses only for the number of months indicated in A above.)
1 Gasoline, oil, lubrication, etc. . 2. «©. 2 2 ew ee
2Repairs . 1. ee
3 Tires, supplies,etc.. © 2 6. 6 6 se ew ee ee ee
4 Other: (a) Insurance» 2. ee ee ee ee
(b) Taxes sw ww we ee ee ee
(c) Tags and licenses . . . 2 ew ee we
(d) Interest. 2 6 2 ee ee ee
(e) Miscellaneous. . 2 2 ee ee ee
5 Total. 6 6 ee ee ee ee
6 Percentage of expense applicable to business (line C above
divided by line B above) . 2... ee ee % % &
7 Business portion (line 5 multiplied byline6). . . . » .
8 Depreciation from Part VI,column(h). . . 2 2 ee
9 Line 8divided by12 months. . . «© 2 ee wwe
10 Multiply line 9 by A, above . . . re ee
11 Total (line 7 plus line 10) (seeline19). | |. | |.
Optional Method:
12 Enter 15,000 miles or the combined mileage on line C above, whichever is smaller. . . - - + + + miles
13 Multiply line 12 by 17¢ and enterresult. © 6 6 6 6 ee ee ee
14 Any excess of the combined mileage of line C over 15,000 miles . rs miles
15 Multiply line 14 by 10g and enter result . 2. 2 1 1 ee ee ee ee ee
16 Total mileage rate expense (line 13 plusline 15). . . . . . ee ey
17 Business portion of automobile interest and State and local taxes (other than gasoline) ee ew ew we
18 Total (line 16 plus line 17)... ss ee :
Summary:
19 Enter the combined total from line 11 or the amount on line 18, whicheverisused. . . . . « «
20 Add parking fees andtolls. . . 6 6 6 ee ee ee ee ew ee ee ———
21 Total. Enter here and in Part! line3. se :
PART V.—Computation of Automobile Basis
Old Car Traded In: Present Car:
1 (a) Total mileage accumulated . . . miles_| 10 Purchase price or other basis . . . —
(b) Portion applicable to business . . |______miles_| 11 Less: Estimated salvage value. . .
(c) Percentage applicable to business 12 Balance (line 10 less line 11). 2. J
(line (b) divided by line (a)). . . |. % | 13 Line 12 multiplied by percentage on line
2 Purchase price or otherbasis. . . « GofPatIV. 2... ew ee

3 Less: Trade-in allowance . . . . .
4 Difference (line 2 lessline3). . . «

14 Less gain or plus (loss) on lineQ .

15 Basis for computing depreciation . .

5 Line 4 multiplied by percentage on line
51)
6 Less gain or plus (loss) on previous

tradeing 2 6 ee ee

Note:

7 Difference (line 5lessline6). . . .
8 Depreciation allowed or allowable . .

9 Gain (line 8 less line 7) or (loss) (line 7
less line 8) on business portion of car_.

If you acquired the vehicle for cash only, or by trade-in
of another vehicle not used in business, complete only
lines 10 through 15. If acquired by trade-in of another
vehicle previously used in business, complete lines 1
through 15. (Recompute the basis for depreciation
each succeeding year if the percentage of business use
changes.)

PART Vi.—Depreciation of Automobile

Make and style of vehicle Date Basis Grom line] Age when | Depreciation allowed | Method of computing | Rate (6) Depreciation
a year

(a)

acquired 15, Part eequled npr years deprerat or life (yeas)

26 US, GOVERNMENT PRINTING OFFICE : 1977—-O-235-131

235-131-1