1Terry Greene, age 24, social security number 943-95-1210, is unmarried

2 Terry received his degree in accounting from Eastern University on May 7, 2017. The day after graduation, Terry rented a stretched limousine (cost $250 plus $60 for gasoline and $20 tip for the driver) to move himself and his personal belongings approximately 180 miles to Asheville in order to assume the presidency of Lakeway Products. A standard rental car would have cost Terry $50. On the way, Terry stopped for a meal that cost $10. Terry worked 30 weeks after graduation. Based on the financial strength of his ownership of Lakeway Products, Terry purchased his personal residence at 1478 Maple Avenue (ZIP code 28801) (only two blocks from his business) on July 17^h for a $190,000 cash down payment and a $1,350,000 mortgage. Terry also paid $3,100 for attorney fees in connection with purchase of the property. The $190,000 came from the sale proceeds on June 2, 2017 from a house in Jamestown that Terry had bought on August 6, 2016 for $80,000 that he used as his principal residence during his senior year

3. Terry's aunt, Doris Freeman (Aunt Doris), died on December 2, 2016. Terry was the sole beneficiary of his aunt's $4,000,000 estate, primarily comprised of Lakeway Products, which is a proprietorship that sells flooring products at retail. Date of death valuation was used. The estate was settled and its assets were distributed to Terry on April 30, 2017.

4. During 2017, Terry provided over one-half of the support of his widowed mother, Irene, age 72, social security number 141-74-3621, who lived in a retirement community in Raleigh for the entire year. Irenes only income during the year was $3,975 from her taxable pension at Specialty Design Co., and $6,210 in social security benefits.

5. During Ashevilles annual Biltmore House Centennial Celebration, Terry was out of the country. Terry took advantage of his absence to rent his house for 7 days to a historical society that used the house as guest quarters and entertainment facilities for some of its associates during the celebration. Included in the total expenses of operating the house for the year are the following amounts allocable to the week of rental: $500 interest on house mortgage*, $250 real estate taxes*, and $113 for utilities/insurance and other forms of overhead.

6. In order to recover some of the costs of his gardening hobby, Terry occasionally sells some of the flowers to friends for special occasions, such as funerals and weddings. Receipts in 2017 were $1,400. Expenses for the gardens included $2,000 for purchases of plants, $3,200 for contract labor, $430 allocable real estate taxes* and $800 in chemicals (fungicides, fertilizers, etc.).

7. A tornado struck Asheville during September 2017 killing several stately trees at Terry's residence and at Lakeway Products. Costs of replacing the trees were $2,800 at Terry's residence and $2,400 at Lakeway Products. The replacements restored the properties to pre-storm values and that the cost bases attributable to the damaged trees were $4,000 and $4,300, respectively. After several months of negotiation, Terry collected $1,300 on April 5, 2018 from the insurance carrier for the loss at his residence. No further recovery is expected.

8. On August 13, 2017 Tony Jamison, a high school buddy, became enamored with Terry's Madison High School ring. Since Terry now wears his college ring, he sold the high school ring to Tony for $180 for which he paid $115 in May 2013. Also, on May 8, 2017, Terry sold Tony for $50, a bicycle which he used while Eastern University. Terry bought the bicycle for $310 on July 14, 2012.

9. On 6/1/17 Terry donated a painting inherited from Aunt Doris to the First Baptist Church, 412

Briarwood Lane, Asheville, North Carolina 28801. The church planned to sell the painting and use the cash to pay for new hymnals in memory of Aunt Doris. The painting appraised for $4,600. Its fair market value in Aunt Doris's estate was $3,100.

*included in the totals reported for Terry's residence per #18 below

Lakeway Products (EIN 53-2679198) is located at 219 Beech Street, Asheville, North Carolina 28801. Lakeways principal business code number is 444190. The following data are from the entity's 2017 accrual-basis financial accounting records (unaudited):

Revenue Accounts:

Sales $9,910,000

Allowance for sales returns (165,000)¹

Land Rental Fees 120,000

Expense Accounts:

Amortization of organizational expenditures 3,000

Purchases 6,711,450

Purchase returns & allowances (629,300)

Salary paid to Terry Greene (as president) 400,000

Non-officer employee wages 2,625,000

Freight-in 92,700

Insurance (other than health) 21,000

Health insurance 22,000²

Janitorial service 15,000

Accounting and legal (net of jury pay received from T. Greene) 24,500

Contribution: United Way 6,000³

Contribution: re-election campaign of Sheriff I Am the Law 1,000

Utilities 115,000

Provision for Taxes (all paid in and attributable to 2017 on a quarterly basis during the 2^nd and 3^rd quarters)

Federal income 75,000

State income 18,000

Self-employment 27,500 120,500

Advertising 56,000

Repairs 83,100

Pension plan for employees 150,000

Contribution to Money-Purchase Keogh plan for Terry Greene 30,000

Sales discounts forfeited (134,850)

Leased vehicles and equipment (all operating assets are rented) 12,000

Contingent Loss: negligence lawsuit settlement 2,700⁴

Balance Sheet and Other Information:

Flooring Products Inventory (Lower of cost or market):

Beginning of the year $ 1,230,000

End of the year 1,308,000

Unearned Land Rental Fees

Beginning of the year $ 0

End of the year 3,850

(for rental of surplus land owned by Lakeway Products to a neighboring company for January 2018 collected in December 2017)

Unearned Sales Revenue (liability) account at:

Beginning of the year $ 8,600

End of the year 11,000

(this is for customer deposits received in December 2017 on flooring to be delivered in January 2018. The total value of the flooring when delivered is expected to be $50,000.)

¹The Allowance for Sales Returns represents 2017 flooring sales returned during 2017 ($120,000) and flooring expected to be returned in 2018 ($45,000) within the 12-month warranty period provided by Lakeways standard sales contract.

²Included in health insurance expense is $4,000 for premiums related to Terrys health

coverage; the remainder is for non-owner employees. You may assume that the company has met all ACA requirements regarding coverage and reporting.

³The United Way contribution represents a $6,000 pledge made on October 10, 2017. $4,000 of the pledge was paid on December 5, 2017 and the balance was paid on January 5, 2018 using Lakeway Products checks.

⁴Three years ago, a wire holding a merchandising display from the ceiling of Lakeway Products broke. The display fell striking a customer on the head causing a nasty contusion. The customer sued Lakeway Products for negligence. In December of the current year, the case was settled with Lakeway Products being instructed by the court to pay (no insurance coverage) the plaintiff in January of the next year. Terry will not challenge the court ruling.

Also, in reviewing Lakeway Products deposits, you found a deposit on 7/1/17 for the $50,000 proceeds from a simple-interest note (issued at par) with a stated interest rate of 8%. The local savings and loan, an unrelated entity carries this 2-year balloon note. Interest and principal are due at maturity.

11. In June 2017 Terry bought a Lexus coupe from Worthit Used Cars for $37,000. During 2017 Terry drove the Lexus a total of 6,750 miles. 50 miles were for commuting to and from work, 1,800 miles were for out-of-town trips in connection with business of Lakeway Products, 300 miles were for his own medical purposes, and 75 miles were for a trip as an appointed delegate to a church convention.

12. Terry paid $1,800 on 12/29/2017 for real estate taxes on his first cousin's home in Warsaw, Indiana. The tax assessor was threatening to collect the taxes via a 'tax sale,' and Terry did not want to see his cousin put out onto the street.

13. Terry bought four tickets at $100 each for a special show by the Ice Capades for the benefit of the March of Dimes. Per ticket cost for a regular show was $30. Terry knew he had a conflict and would be unable to attend the show. The tickets expired unused.

14. Out-of-pocket medical and dental expenses were paid during 2017 as follows:

Dues to Stay Fit Health Club $ 210

Installation of a jacuzzi in Terry's residence at the

recommendation of a physical therapist at Stay Fit

Health Club to help relieve pressure in Terry's joints 4, 500

(the jacuzzi added $2,500 to the value of the house)

Gall Bladder surgery for Irene 7,120

(Note: Terry has informed you the amount he paid for Irenes surgery was in excess of amounts covered by Medicare but that he was able to get a limited recovery of $2,700 through his medical insurance policy at Lakeway Products.

15. On 1/15/18 Terry paid $2,500 in state income taxes and $3,900 in federal income taxes as

estimated tax payments for the 4^th quarter of 2017.

16. On February 20, 2017 Terry was given 120 shares of Ace Coverings Corporation common stock by his Uncle Ed who bought the stock on September 14, 2013 for $2,500. Value of the stock at the date of the gift was $2,200. The stock was sold by Terry on December 14, 2017 for $2,400.

17. Terry has 1099s which indicate the following receipts for 2017:

Received From	Form Number	Description
Proform, Inc.	1099-Div	Box 1a & 1b: $120
Proform, Inc.	1099-Div	Box 3: $1,500
Proform, Inc.	1099-Div	Box 4: $250
Peoples Credit Union	1099-INT	Box 1: $1,200
State of North Carolina	1099-INT	Box 1: $32
State of North Carolina	1099-G	Box 2: $375
Asheville Heritage Preservation Foundation	1099-Misc	Box 1: $5,000
City of Jamestown	1099-INT	Box 8:$750
N.C. Administrative Office of the Courts	1099-Misc	Box 7:$500

18. Other non-medical disbursements from Terry's personal checkbook during 2017 were:

Business trips representing Lakeway Products:

Meals $ 740

Lodging 775

Jury pay (Lakeway policy requires all employees to 500

reimburse the company for any jury pay received)

(Terry has documentation for these expenditures for which no reimbursement was received from Lakeway.)

Subscription to Readers Digest magazine 75

Subscription to Effective Retail Floor Merchandising 140

Personal interest on VISA 530

Traditional IRA (Set up and funded on 1/2/18) for 2017;

the IRAs fair market value at 4/15/18 was $7,300) 5,000

Interest on loans to buy stock of Proform, Inc 11,500

Home mortgage interest payments to the bank

(form 1098 Mortgage Int. Stmt issued by bank to Terry) 93,670

Property taxes on home 11,200

Services of D.E. Duction, CPA for preparation of

various tax returns including services related to

Lakeway Products ($300) 1,800

Purchase of a fishing license 30

Special assessment by the City of Asheville for

sidewalk construction 5,100

Cash contributions to 1^st First Baptist Church 6,500

Christmas gift to the Reverend John Harwood,

pastor of First Baptist Church 400

Loan to Lakeway Products on October 1, 2017 100,000

(This is a demand note that is unsecured and carries no stated annual interest rate. Proceeds from the loan were used for business expansion.)

Purchase 100 shares of Proform, Inc. common stock on

May 15 as a graduation present to himself 1,000

Form 1040-EZ