Ken (birthdate July 1, 1987) and Amy (birthdate July 4, 1989) 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. 

Income: Ken’s salary (salesman)..................................... $28,345 

Amy’s wages (part-time nurse) ..........................................17,490 

Insurance reimbursement for repairs from an................... 500 

auto accident Gift from Uncle George............................... 2,000 

Interest income from Lodge State Bank.............................. 833 

Federal income taxes withheld: 

From Ken’s salary ................................................................2,600 

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 2018, Amy had the following income and expenses: 

Sales of books.............................. $320,985 

Expenses Store rental..................... 15,985 

Office expense................................... 6,150 

Advertising....................................... 11,700 

City business license........................ 1,020 

Payroll.............................................. 83,550 

Payroll taxes...................................... 8,392 

Utilities............................................... 8,050 

Other.................................................. 3,000 

Cost of inventory sold.................. 184,855

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 $20,000 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). 

Required: 

Complete the Booths’ federal income tax return for 2018 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.