Ken (birthdate July 1, 1989) and Amy (birthdate July 4, 1991) Booth have brought you the following information regarding their income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income.

Amy owns and operates a computer bookstore named “The Disk Drive.” The store is located at 2000 Broadway Street, Menomonie, WI 54751. The business EIN is 271234567 and the principal business code for bookstores is 451211. During 2020, Amy had the following income and expenses:

Amy treats inventory as nonincidental materials and supplies.
This year, Amy loaned a friend $10,000 so that he could make an investment.
Instead of making the investment, the friend lost all the money gambling and left for parts unknown. Amy has no hope of ever collecting on this bad debt.
Ken, who ordinarily never gambles, won $20,677 at a casino birthday party for one of his friends.
The Booths provide the sole support for Ken’s parents, Rod (Social Security number 124809050) and Mary (Social Security number 489376676) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI, 54751, and their Social Security numbers are 343753456 (Ken) and 123457890 (Amy).
Ken and Amy can claim a $500 other dependent credit for each parent. Ken and Amy received a $2,400 EIP in 2020.

Required:

Complete the Booths’ federal income tax return for 2020 on Form 1040, Schedule 1, Schedule C, Schedule D, and Form 8949. A statement is required to be attached to a return for a nonbusiness bad debt, but this requirement may be ignored for this problem. Assume no 1099B is filed in association with the bad debt when filling out Form 8949.

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Income: Ken's salary (salesman) Amy's wages (part-time nurse) Insurance reimbursement for repairs from an auto accident Gift from Uncle George Interest income from Lodge State Bank Federal income taxes withheld: From Ken's salary From Amy's wages $28,700 17,600 500 2,000 906 2,800 650