Employee Business Expenses
(Please use Form 3903 to figure moving expense deduction.)
> Attach to Form 1040.

Social security number

OMB No. 1545-0139
1984
54

Occupation in which expenses were incurred

om 2106

Department of the Treasury
Internal Revenue Service

Your name

Employee Business Expenses Deductible in Figuring Adjusted Gross Income on Form 1040, Line 32

1 Reimbursed and unreimbursed fares for airplane, boat, bus, taxicab, train,etc. . . . » Lt
2 Reimbursed and unreimbursed meal, lodging, and other expenses while away from your tax' home. . 2
3 Reimbursed and unreimbursed car expenses from Part Il. coe .. 3
4 Reimbursed and unreimbursed outside salesperson’s expenses other than those shown o on lines
1 through 3. Caution: Do not use this line unless you are’an outside salesperson (see instructions).
: 4
5 Reimbursed expenses other than those shown on lines 1 through 3 (see instructions). 5
6 Add lines 1 through 5 : 6
7 Employer's payments for these expenses only if not included on Form W: 2. oo 7
8 If line 6 is more than line 7, subtract line 7 from line 6. Enter here and on Form 1040, line 25. 8
9 Ifline 7 is more than line 6, subtract line 6 from line 7. Enter here and on Form 1040, line 7. 9
Car Expenses (Use either your actual expenses or the mileage rate.
Carl Car2 Car3
A Number of months you used car for business during 1984 . months months months.
B Total mileage for months onlineA . . toe ee miles miles miles
C Business partoflineBmileage . . . 2. 2. 2... miles miles miles
D Date placed in service .
Actual Expenses (Include expenses on vines 1 and 2 only for the months shown on line A, above.
1 Gasoline, oil, lubrication,etc. . . . . . . . . Ld
2 Other. 2
3 Total (add lines 1 and 2). 3
4 Divide line C by line B, above 4 % % %
5 Multiply line 3 byline4 . 5
6 Depreciation (see instructions) 6
7 Business parking fees and tolls. 7
8 Add lines 5 through 7. Also enter in Part 1, line 3. 8
Mileage Rate
9 Enter the smaller of (a) 15,000 miles or (b) the total mileage (Car 1+ Car 2+ Car 3) from line C, above |_9 miles
10 Multiply line 9 by 2042¢ (.205) (11¢ (.11) if applicable, see instructions) . . . . 2 . . £10 I
11 Enter the total mileage, if any (Car 1 + Car 2 + Car 3) from line C that is over 15, 000 miles wee LAD miles
12 Multiply line 11 by11¢(.11)andenterhere . . . . . (12
13 Business part of car interest, parking fees, tolls, and State and ‘local taxes Coxcent gasoline tax). . . (13
14 Total (add lines 10, 12, and 13). Enter here andin Partl,line3. . . 14
Information About Educational Expenses Shown in Part loron Schedule ry (Form 1040)
1 Did you need this education to meet the minimum educational requirements for your business or profession? . -O Yes (No
2 Will this study program qualify you for a new business or profession? .O Yes [J No

Note: /f your answer to question 1 or 2 is ‘‘Yes,’’ stop here. You cannot deduct these ¢ expenses, even if you do not intend to change
your business or profession.
3 If ‘‘No,”’ list the courses you took and their relationship to your business or profession P_

Changes You Should Note
New rules apply that may limit the amount of

@ The section 179 expense deduction and

@ New recordkeeping rules for trade or
investment credit are not allowed for

business expenses will apply beginning in

your recovery deduction for depreciation and

investment credit for certain property used in

your trade or business and placed in service

after June 18, 1984.

@ Forcalendar year 1984, the recovery
deduction for a ‘‘passenger automobile’’

may not exceed $4,000, and the investment

credit may not exceed $1,000. In figuring
your recovery deduction, for purposes of
this limitation, the section 179 expense
deduction is treated as a recovery
deduction. These amounts are reduced if
your business use is less than 100%.

certain property such as ‘‘passenger
automobiles”’ and other transportation
property used 50% or less in your trade or
business. Additionally, if you use the
property 50% or less ina trade or business,
you must use the straight-line method of
depreciation.

No deduction for recovery depreciation or
investment credit will be allowed for an
employee's ‘passenger automobile” or
other transportation property unless such
use is for the convenience of the employer
and required as a condition of employment.

1985. See Important Tax Law Changes
on page 2 of your 1984 Form 1040
Instructions.

See Publications 572, Investment Credit
and 534, Depreciation, for more detail on the
kinds of property to which the above
limitations apply. Also, see Forms 3468,
Computation of Investment Credit, and 4562,
Depreciation and Amortization, for additional
information.

For Paperwork Reduction Act Notice, see instructions on back.

Form 2106 1984)


General 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.

Purpose of form.—This form is used to show
employee business expenses. Use this form or
asimilar statement if you are not an outside
salesperson and have reimbursed or
unreimbursed transportation, travel away from
home, and car expenses and other expenses
that are reimbursed, or if you are an outside
salesperson and have reimbursed and
unreimbursed business expenses. Do not
enter on this form any employee business
expenses that are not reimbursed by your
employer, other than travel or transportation
expenses, unless you are an outside
salesperson. Report these expenses on
Schedule A (Form 1040).

You do not have to use this form or similar
statement if you were required to and did
account to your employer and any of the
following apply to you:
© Expenses are equal to the total of your

reimbursements and allowances;

@ Expenses are more than the total of your
reimbursements and allowances and you do
not deduct the excess expenses; or
Expenses are less than your
reimbursements and allowances and your
employer does not include the total
reimbursements and allowances on Form
W-2. In this case, include the amount by
which the reimbursements and allowances
are more than your expenses on line 7,
Form 1040.

Also, complete and file Form 2106 if you
have deductible educational expenses.
Expenses to include.—Only include expenses
you paid or incurred in 1984 in connection
with services you performed as an employee.
Outside salesperson.—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 are required
to sell at your employer's place of business.
Accounting to your employer.—This is giving
your employer documentary evidence and an
account book, diary, or similar record in which
you entered each expense at or near the time
you made it.

Tax home.—Generally, your tax home is your
main place of business or post of duty,
regardless of where you maintain your family
home.

Publications. —See the following publications
for more information about employee business
expenses and the records you must keep:
Publications 463, Travel, Entertainment, and
Gift Expenses; 508, Educational Expenses;
529, Miscellaneous Deductions; 587,
Business Use of Your Home.

Specific Instructions

Part!

Line 1.—Fares include fares for local
business transportation as well as fares for
business travel away from home. Do not
include fares for commuting to and from work.
Also include tips, baggage charges, charges for
transporting display material, etc.

Line 2.—Other expenses include tips,
cleaning and laundry, telephone and
telegraph, public stenographer's fees, etc.

Standard meal allowance.—Instead of
actual cost, you generally may include your
expenses for meals at $14 a day when you are
in a general area less than 30 days and at $9 a
day if you are in a general area 30 days or
more. See Publication 463.

Line 4.—Outside salespersons include all
your expenses not shown on lines 1 through 3.
These include entertainment, gifts,
publications, etc., and expenses for
employment-related education, such as
tuition, books, lab fees, etc. See the
instructions for Part Ill.

Line 5.—Other individuals who are not
outside salespersons include reimbursed
expenses other than those shown on lines 1
through 3 (for examples, see instructions for
Part I, line 4). Do not use this line if you are an
outside salesperson. If you were reimbursed in
full, enter the total expenses. If you were
partially reimbursed, enter the expenses to the
extent of the reimbursement. Enter any excess
expenses on Schedule A (Form 1040), line 22.
Ifyou received a partial reimbursement that
was intended to cover all expenses described
on lines 1, 2, 3, and 5 without specifying the
amount for each expense, use the formula in
Publication 463 to figure the amount to enter.

Part Il

Generally, you may figure your car expenses
using either:

a. The actual cost of your car expenses (such

as gas, oil, repairs, depreciation, section
179 deduction, etc.); or

The standard mileage rate which gives you
a fixed deduction per business mile. Do not
use this method if any of the following
apply:

The car is leased or used for hire;

More than one car is used in your business
ata time;

You take a section 179 deduction;

You figured depreciation in an earlier year
using ACRS (Accelerated Cost Recovery
System) or a method other than straight-
line; or

@ You took additional first-year depreciation.

If you are eligible to use the standard

mileage rate, you may want to figure your
deduction under both methods and use
whichever one gives you the larger deduction.
Note: /f you use the standard mileage rate,

you cannot use ACRS for that car.

Actual Expenses

Line 2.—Include on this line your actual
expenses for repairs, tires, supplies,
insurance, taxes, tags, licenses, interest, etc.
Line 6.—The method of depreciation you may
use depends on when you started using your
car (placed the car in service). Do not deduct
depreciation in excess of your basis or if your
car is fully depreciated.

Trad —If you trade in an automobile used
ina trade or business, see Publication 463 for
figuring depreciation.

Cars placed in service before 1981 or for
which standard mileage was used.—If you
used an allowable depreciation method or the
standard mileage rate, continue to use that
method. If you want to change to straight-line
depreciation or to another method of
depreciation, see Publication 534. You cannot
change to ACRS.

Percentage of business use.—f line A shows
12 months, multiply the amount of
depreciation for the entire year by the
percentage on line 4. If line A shows less than
12 months, multiply the resulting amount from
the preceding sentence by the percentage
arrived at by dividing the months on line A by
12. Enter the appropriate amount on line 6.

ee s

Cars placed in service after 1980 and before
1984.—If you placed a car in service after
1980 and before 1984 and you did not use the
standard mileage rate, you must continue to
use one of the following methods for figuring
depreciation under ACRS:

@ One ACRS method lets you deduct the
following percentages of the business cost
or other basis of your car. Use 38% for the
year following the year you placed your car
in service and 37% for the third year.

@ Another ACRS method allows you to use a
straight-line method over a recovery period
of 3, 5, or 12 years with the half-year
convention.

Do not consider salvage value in either of the
ACRS methods.

Percentage of business use.—If you use
ACRS, divide business miles by total miles for
the year. If line A shows less than 12 months
and you were not an employee all year, multiply
the percentage on line 4 by the months on line
Aand divide by 12. If you sell (not trade) or
stop using your car for business before the end
of the year, line 6 is zero for that car.

Multiply the cost of the car (adjusted for
trade-in, etc.) by the percentage of business
use. From this amount subtract the section
179 deduction you have taken and half of any
investment credit you took (unless you took
the reduced credit). This result will be
multiplied by the ACRS percentage for the
year and entered on line 6.

Cars placed in service after 1983.—Use
Form 4562 to figure your depreciation,
including any section 179 expense deduction,
for cars placed in service during 1984. Attach
Form 4562 to Form 2106 and enter the
amount of car depreciation from Form 4562
on line 6 of Form 2106.

Investment credit.—|If you placed a car in
service during 1984, use Form 3468 to
determine the amount of investment credit
you can take.

Mileage Rate

Use 20¥2¢ (.205) a mile for the first 15,000
miles of business use a year. Use 11¢ (.11)a
mile for each mile over 15,000 business miles
ayear. You must also use 11¢ (.11)a mile if
your car is fully depreciated. Generally, a car
placed in service after 1979 is considered fully
depreciated after 60,000 miles of business
use at the maximum standard mileage rate.

Line 13.—The business part of parking and
tolls is the amount you paid or incurred for
business purposes. To figure the business part
of interest and State and local taxes (except
gasoline taxes), multiply the total of these
items by the percentage you get by dividing
line C by line B. See Publication 463.

Part Ill

If you show educational expenses in Part | or
on Schedule A (Form 1040), complete Part Ill.

You can deduct the cost of education that
helps you keep or improve your skills for your
business or profession. This includes education
that your employer, the law, or regulations
require you to get in order to keep your job or
your salary. Do not deduct the cost of study
that helps you meet the minimum educational
requirements for your business or profession
of qualifies you for a new business or
profession even if you do not intend to change
to a new business or profession. See
Publication 508 for more information.