Professor K works at Moravian College. His salary for 2019 will be $100,000 (He wishes). He expects a bonus of $10,000 to be paid in February 2020 (Sure. He believes in the Tooth Fairy too...). Moravian College provides a full benefit plan for which Professor K does not have to contribute.

Professor K is a CPA and maintains his own accounting business. His gross income from the business for 2018 was $30,000. He billed an additional $15,000 but did not collect it until

2019.

Professor K renovates old buildings and collects rent. This is a sole proprietorship. During the course of the year, he collected $100,000 in rent, had depreciation expense of $50,000, interest expense of $40,000 and other expenses of $30,000.

Additionally, he likes to go to Atlantic City and play the slot machines. During the year, he had winnings of $5,000 and losses of $6,000. He also had $2,000 of travel expenses to Atlantic City.

His bank account generated interest of $1,000 but he did not withdraw that interest by December 31, 2018. He was the beneficiary of a life insurance policy that paid him $25,000 during the year.

He made alimony payments of $12,000 during 2018. His divorce agreement was dated January 2, 2018. His contributions to his IRA was $5,000.

Professor K also paid the following expenses during the year 2018:

Home electricity $5,000

Credit card interest $650

Home mortgage interest $7,000

State income tax $7,000

State sales tax $3,000

Charitable contributions. $6,000

Medical expenses $6,000

His social security tax payments were $7,650 for 2018 and he had federal income tax withholding of $15,000.

Complete his tax return.