Ken (birthdate July 1, 1989) and Amy (birthdate July 4, 1991) Booth have brought you the following information regarding their income, expenses, and with holding for the year. They are unsure which of these items must be used to calculate taxable income. Income: Ken's salary (salesman) $28,700 Amy's wages (part-time nurse) 17,600 Insurance reimbursement for repairs from an auto accident 500 Gift from Uncle George 2,000 Interest income from Lodge State Bank 906 Federal income taxes withheld: From Ken's salary 2,800 From Amy's wages 650 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 27-1234567 and the principal business code for bookstores is 451211. During 2020, Amy had the following income and expenses: $321,450 Sales of books Expenses Store rental Office expense Advertising City business license Payroll Payroll taxes Utilities Other 16,000 6,067 11,711 1,020 83,550 8,400 8,050 3,000 Beginning inventory Purchases Ending inventory $ 75,000 191,000 80,000 Amy treats inventory as non-incidental 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 124-80-9050) and Mary (Social Security number 489-37-6676) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI, 54751, and their Social Security numbers are 343-75-3456 (Ken) and 123-45-7890 (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 1099-B is filed in association with the bad debt when filling out Form 8949. Ken (birthdate July 1, 1989) and Amy (birthdate July 4, 1991) Booth have brought you the following information regarding their income, expenses, and with holding for the year. They are unsure which of these items must be used to calculate taxable income. Income: Ken's salary (salesman) $28,700 Amy's wages (part-time nurse) 17,600 Insurance reimbursement for repairs from an auto accident 500 Gift from Uncle George 2,000 Interest income from Lodge State Bank 906 Federal income taxes withheld: From Ken's salary 2,800 From Amy's wages 650 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 27-1234567 and the principal business code for bookstores is 451211. During 2020, Amy had the following income and expenses: $321,450 Sales of books Expenses Store rental Office expense Advertising City business license Payroll Payroll taxes Utilities Other 16,000 6,067 11,711 1,020 83,550 8,400 8,050 3,000 Beginning inventory Purchases Ending inventory $ 75,000 191,000 80,000 Amy treats inventory as non-incidental 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 124-80-9050) and Mary (Social Security number 489-37-6676) Booth, who live in their own home. Ken and Amy live at 2345 Wilson Avenue, Menomonie, WI, 54751, and their Social Security numbers are 343-75-3456 (Ken) and 123-45-7890 (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 1099-B is filed in association with the bad debt when filling out Form 8949
