Note: This problem is divided into four parts. You will need to complete some of the forms in the other parts in order to determine the amounts to be used on Form 1040. Some of the data information will be reproduced in the other parts for convenience. Enter all amounts as positive numbers, except for a "loss". If required, enter a "loss" as a negative number on the tax form. If an amount box does not require an entry or the answer is zero, enter "0". On Form SE, use rounded amounts in subsequent computations. Information regarding (1) the business which Gregory operates and (2) Lulu's stock transactions are presented below. 1. The Rock Glen House B&B is operated as a sole proprietorship and had the following income and expenses for the year: Room rental income $138,000 Vending machine income 2,100 Advertising expense 4,810 Depreciation for book and tax purposes 18,100 Mortgage interest on the B&B 23,010 Wages of cleaning people 17,540 Taxes and licenses 6,420 Supplies consumed 18,870 Business insurance 6,300 Laundry

expenses 4,289 Accounting fees 1,850 Office expenses 2,400 Utilities 6,350 All of the above amounts relate to the business portion of the Bed & Breakfast; the personal portion is accounted for separately. The Rock Glen House B&B uses the cash method of accounting and has no inventory. The employer tax ID number is 95-1234567. 2. Lulu has a stock portfolio. During the year she sold the following stock, for which she received 1099-B Forms, as follows: Orange Co. Gold Co. Green Co. Sales price $8,100 See Form $1,450 Basis 3,800 1099-B 2,575 Date acquired 02/11/18 10/31/13 Date sold 06/19/18 10/23/18