om 2106 Employee Business Expenses

> See instructions on back.

Department of the Treasury > Attach to Form 1040.
Internal Revenue Service :

OMB No. 1545-0139

1986

Attachment
Sequence No. 54

Your name Social security number Occupation in which expenses were incurred

Employee Business Expenses Deductible in Figuring Adjusted Gross Income

1 Vehicle expenses from Part Il, lines 15 or 22 oe 1
2 Parking fees, tolls, and business portion of certain interest and taxes (see instructions) . 2
3 Local transportation including train, cabs, bus, airplane, etc . 3
4 Travel expenses while away from home overnight including meals, lodging, airplane, car rental, taxi, etc. 4
5 Employees who are not outside salespersons: Enter your expenses, not included on lines 1 through
4, for entertainment, gifts, and other business expenses, up to the amount you were reimbursed by
your employer. Use Schedule A (Form 1040) for these expenses that were more than your
reimbursement . 5
6 Outside salesperson’s expenses: Enter your total expenses for entertainment, gifts, and other
business expenses not included on lines 1 through 4 . 6
7 Add lines 1 through 6 . : 7
8 Enter reimbursements from employer on this line ifthe reimbursements were not included o on Form W: 2 8
9 If line 7 is more than line 8, enter difference here and on Form 1040, line 25 . 9
10 If line 8 is more than line 7, enter difference here and include it on Form 1040, line 7 10
Vehicle Expenses (Use either your actual expenses or the standard mileage rate. y
Section A.—General Information Vehicle 1 Vehicle 2
1 Enter the date vehicle was placed in service . 1
2 Total mileage vehicle was used during 1986 . oo 2 miles miles
3 Miles included on line 2 that vehicle was used for business . 3 miles miles
4 Percent of business use (divide line 3 by line 2). 4 % %
5 Average daily round trip commuting distance 5 miles miles
6 Miles included on line 2 that vehicle was used for commuting 6 miles miles
7 Other personal mileage (subtract line 6 plus line 3 fromline 2). . LZ miles miles
8 Do you (or your spouse) have another vehicle available for personal purposes? . . . . . .O Yes ONo
9 If your employer provided you with a vehicle, is personal use during off duty hours permitted? .. OYes (] No [ Notapplicable
O No

10 Do you have evidence to support your deduction? _[] Yes_[] No. Ifyes, is the evidence written? - O Yes

Section B.—Standard Mileage Rate (Do not use this section unless you own the vehicle.)

11 Enter the smaller of Part Il, line 3 or 15,000 miles .

12 Subtract line 11 from Part Il, line 3.

13 Multiply line 11 by 21¢ (.21) (see instructions for a fully depreciated vehicle) .

14 Multiply line 12by11¢(.11).
15 Add lines 13 and 14. Enter total here and on Part | line

11 miles
12 miles
13
14
15

Section C.—Actual Expenses Vehicle 1

Vehicle 2

16 Gasoline, oil, repairs, vehicle insurance, etc . 16

17 Vehiclerentals . . . . 17

18 Value of employer-provided ‘Vehicle (applies only if ‘included on

Form W-2 at 100% fair rental value, see instructions) 18
19 Addlines 16 through 18... . J... LY
20 Multiply line 19 by the percentage on Partli,lie4 . . . . . [20
21 Depreciation from Section D, column (f) (see instructions) . . . 21
22 Add lines 20 and 21. Entertotalhere andonPartl,linel_ . . . | 22

Section D.. —Depreciation of Vehicles (Depreciation can only be claimed for a vehicle you own. If a vehicle is used 50 percent or
less in a trade or business, the Section 179 deduction is not allowed and depreciation must be taken using the straight line

method over 5 years. For other limitations, see instructions.)

Basis for depreciation

atic Method of figuring Total
Costorether basis | (Business use only—see depreciation Depreciation deduction | Section 179 expense | csiumn (a) column (e)
(a) (b) ©) (d) (e) 10}
Vehicle 1
Vehicle 2

For Paperwork Reduction Act Notice, see Instructions.

Form 2106 (1986)


Form 2106 (1986)

Page 2

Items You Should Note:

@ If you are an employee and claim any
deduction for the business use of a vehicle,
you must use Form 2106 and complete Part Il,
Section A, including questions 8 through 10.

@ If the vehicle was used more than 50
percent for business in the first year it was
placed in service, and used 50 percent or less
ina later year, part of the depreciation,
Section 179 deduction, and investment credit
will have to be recaptured in the later year.
Figure the amount of depreciation and Section
179 deduction to be recaptured on

Form 4797, Gains and Losses From Sales or
Exchanges Of Assets Used in a Trade or
Business and Involuntary Conversions. Figure
the amount of investment credit to be
recaptured on Form 4255, Recapture of
Investment Credit.

e Recent legislation provides a new method
that reduces the allowable depreciation
deduction for automobiles placed in service
after 12/31/86. However, you may elect to use
that method for automobiles placed in service
after 7/31/86. See Publication 534,
Depreciation, for more information

Instructions

Paperwork Reduction Act Notice.—We ask
for this information to carry out the Internal
Revenue laws of the United States. We need it
to ensure that taxpayers are complying with
these laws and to allow us to figure and collect
the right amount of tax. You are required to
give us this information.

Who Must File.—File this form if you are an
employee and are deducting the following
expenses attributable to your job:

© Outside salesperson expenses.

@ Travel and transportation expenses.

© For employees, other than outside
salespersons, any other business expenses,
but only up to the amount of employer
reimbursements.

Exception: You need not complete this form
if you account to your employer by means of
an account book, diary or similar statement,
and your business expenses are equal to your
reimbursement.

For deduction of education expenses as a
business expense, including transportation,
see Publication 508, Educational Expenses.

Line-by-Line Instructions

Part I

For lines 1 through 4 and 6, enter the total
expenses applicable to each of those lines. For
line 5, only enter the expenses up to the
amount of your employer's reimbursement.
Line 2.—Enter any parking fees or tolls you
paid in connection with using your vehicle for
business. If you purchased the vehicle this
year, and paid sales tax, multiply Part Il, line 4
by the total sales tax, and include the result on
this line. If you paid interest on the vehicle,
multiply Part Il, line 4 by that interest and
include the result on this line. The remaining
sales tax and interest should be deducted on
Schedule A (Form 1040).

Line 3.—If you use transportation for
business such as a taxicab, bus, or train, enter
the cost. Also, enter any airplane fares that did
not involve overnight travel. Do not include
transportation while commuting to and from
work.

Line 4.—Enter your meals, lodging, and
transportation expenses paid while traveling
away from your tax home overnight on
business including temporary business
assignments.

Instead of actual cost, you may include your
expenses for meals at $14 a day when you are
in one general area less than 30 days and at $9
a day for all the days, if you are in one general
area 30 days or more. Get Publication 463,
Travel, Entertainment, and Gift Expenses, for
more details.

Lines 5 and 6.—You are an outside
salesperson if you do your selling away from
your employer's place of business. You are not
an outside salesperson if your main duties are
service and delivery or if you sell at your
employer's place of business. If you are
reimbursed by your employer one amount to
cover travel or transportation expenses as well
as other business expenses, allocate your
reimbursement for purposes of line 5. Do this
by dividing the expenses reportable on line 5
by your total expenses, and multiplying the
result by your reimbursement.

Line 8.—Do not include reimbursements on
this line if included on Form W-2.

Part Il

If you used 2 vehicles for business during the
year, use a separate column for each vehicle
in Sections A and C. If you used more than 2,
attach a computation following the format in
Sections A, C, and D.

Line 1.—Date placed in service is the date
you first start using your car for any purpose,
whether personal or business. For example, if
you first start using a car for personal use in
February and convert it to business use in
October, the car is considered placed in
service in February, even though you cannot
start depreciating it until October.

Line 2.—Enter the total mileage each vehicle
was driven for all purposes during the year.
Caution: If you changed jobs during the year
to one in which you first started using a vehicle
in your job, enter only the total mileage for the
months the vehicle was used in your job. After
entering your business miles on line 3, figure
your percentage of business use by dividing
line 3 by line 2. Multiply that percentage by
the number of months the car was used in.
your job, and divide the result by 12. Enter this
percentage on line 4

Line 3.—Do not include commuting mileage
on this line.

Line 5.—Enter your average daily round trip
commuting distance. If you go to a different
business location each day, figure the
average. Commuting mileage is the mileage
from home to your first stop and from your last
stop to home even if you do not go to the same
location each day, or whether or not you are
self-employed

Line 6.—You may figure your total
commuting mileage by multiplying line 5 by
the number of days during the year you used
each vehicle to and from work.

Section B—Standard mileage rate.—You
may use the standard mileage rate instead of
using actual expenses in figuring the
deductible costs of operating a passenger car,
including a van, pick-up or panel truck. You
cannot use the standard mileage rate if you
ever took depreciation on that car using a
method other than straight line. You may not
use the standard mileage rate unless you used
that method the first year you start using the
car for business. If you listed more than one
vehicle on line 3, get Publication 917,
Business Use of a Car.

Line 13.—If your vehicle is fully depreciated,
multiply line 11 by 11¢ a mile (.11) instead of
21¢. A vehicle is considered fully depreciated
after 60,000 miles of business use at the
maximum standard mileage rate.

Line 16.—Enter your total expenses for the
year, for gasoline, oil, repairs, insurance, tires,
license plates, or similar items.
Line 17.—If you rented or leased a vehicle
during the year instead of using one that you
own, enter the cost of renting. However, you
may have to include an amount in income. See
Publication 917. Also, include on this line any
temporary vehicle rentals, such as when your
car was being repaired
Line 18.—If your employer provided you a
vehicle during the year that you used for
business, and included the value on your Form
W-2 at 100 percent of the fair rental value,
enter that amount on this line. If less than the
full rental value was included on your W-2,
such as where your employer reduced the
value for business use based on your records,
do not include any amount on this line, but see
Publication 917.
Section D.—Depreciation
Depreciation is an amount you can deduct
over a certain number of years. In some cases,
you may elect to expense, under Internal
Revenue Code Section 179, part of your
vehicle in the year of purchase. For more
information on depreciation and the Section
179 deduction, including the limitations and
their effective dates, get Publication 917.
Limitations.—For purposes of figuring the
amounts to enter in columns (d), (e), and (f):
© Vehicles placed in service after April 2,
1985. —Depreciation plus Section 179
deduction is limited to $3,200 the first year,
multiplied by the percent of business use (ine
4, Part Il), and $4,800 the second year
multiplied by Part Il, line 4.
© Vehicles placed in service after June 18,
1984 and before April 3, 1985 .—
Depreciation is limited to $6,200 ($6,000 if
placed in service before January 1, 1985.)the
second and third year, multiplied by Part Il,
line 4,
Column (a).—Enter the vehicle’s actual cost
or other basis. If you traded in your vehicle, see
Publication 917 for the computation of basis.
Reduce your basis by any diesel fuel tax credit.
Column (b).—Multiply column (a) by the
percentage in Part Il, line 4. From that result,
subtract any Section 179 expense, and one-
half of investment credit taken (if
applicable,unless you took the reduced credit).
Column (c).— Use one of the following
methods for figuring depreciation under ACRS:
Method 1. Enter “ACRS” and 25%, the first
year placed in service; 38%, the
second year; and 37%, the third
year; or
Method 2. Enter “SL” and your choice of 3, 5,
or 12 years; or
Method 3. You must use this method if the
vehicle was placed in service after
June 18, 1984, and Part ll, line 4
shows 50% or less. Enter “SL” and
10%, the first year; and 20%, the
second and third year.
Column (d).—Multiply column (b) by column
(c) unless you used method 2 above. In that
case divide column (b) by column (c), and if
this is the first or last year of depreciating the
vehicle, divide the result by 2.
Column (e).—If this is the first year the vehicle
was placed in service, and you are taking a
deduction under Section 179, enter the cost
multiplied by Part Il, line 4, but not more than
$3,200 multiplied by Part Il, line 4. If Part Il,
line 4 shows 50 percent or less, enter zero
Column (f).—Add columns (d) and (e), but do
not enter more than the limitation listed
above. If you sold or exchanged your vehicle
during the year, enter zero in column (f) for
that vehicle.