Which method computes allowable transportation expenses based on actual costs incurred?

The correct answer is the Regular Method, which computes allowable transportation expenses based on the actual costs incurred. This method allows taxpayers to calculate their deductible expenses by taking into account the actual amounts spent on transportation, such as fuel, maintenance, and other related expenses directly associated with the use of a vehicle for business purposes.

Using the Regular Method requires meticulous record-keeping of all relevant receipts and expenditures, ensuring an accurate representation of the actual costs. This approach may provide a more precise deduction if the actual expenses are higher than the standard deduction or mileage rates provided by other methods.

The other methods do not base their calculations on actual incurred expenses. For instance, the Optional Method typically applies a simplified calculation, and the Standard Method uses a predetermined rate per mile driven, regardless of real expenses. The Distance Method generally refers to calculating costs based on the distance traveled for business, but it does not take into account the specific actual costs incurred. This makes the Regular Method the most comprehensive choice for computing allowable transportation expenses when actual costs can be documented.