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Assignment $\backslash$#$1$ Instructions:

$1.$ For each item of income listed below please document if the item should be recognized in income or not and why. $($please do this in order presented below and on a word document$)$

$2.$ Once you have determined which items will be recognized and deducted, you will need to complete Page $-1$ of the $2023$ Form $1040$ to line $9-$ Total Income. In addition, complete the $2023$ Schedule $1$ Part $1-$ Additional Income to line $9.$ You can find the fillable or printable $2023$ Form $1040$ and $2023$ Schedule $1$ on the IRS website at www$.$irs.gov. You may complete these forms by hand if you choose. $($make sure they are legible to get full credit$-$ if I can't read it I can't grade it$)$

$3.$ NOTE: This is for $2024$ but we are using the $2023$ forms $\backslash ($ b $/$ c $\backslash )$ that's what is available. The taxation of the income items did not change from $2023-2024.$

Bob $($age $43)$ and Melissa $($age $43)$ Grant are married and live in Lexington, Kentucky. The Grants have two children: Jared, age $15,$ and Alese, age $12.$ The Grants would like to file a joint tax return for the year.

The following information relates to the Grants' tax year:

$-$ Bob's Social Security number is $987-45-1235$

$-$ Melissa's Social Security number is $494-37-4893$

$-$ Jared's Social Security number is $412-32-5690$

$-$ Alese's Social Security number is $412-32-6940$

$-$ The Grants' mailing address is $95$ Hickory Road, Lexington, Kentucky $40502.$

$-$ Jared and Alese are tax dependents for federal tax purposes

$-$ The Grants both want to contribute to the Presidential Election Campaign Fund.

Bob Grant's Forms W$-2$

provided the following

wages and withholding

for the year:

Employer

National Storage

Lexington Little League

Gross Wages

Federal Income Tax

State Income Tax

Withholding

Withholding

$\backslash$$$68,800$

$\backslash$$$9,000$

$\backslash$$$3,950$

$\backslash$$$4,710$

$0$

$0$

Gross Wages

Federal Income Tax

State Income Tax Withholding

Withholding

Melissa Grant's Form

W $-2$ provided the following wages and withholding for the

year:

Employer

Jensen Photography

$\backslash$$$46,500$

$\backslash$$$5,600$

$\backslash$$ $2,850$ All applicable and appropriate payroll taxes were withheld by the Grants' respective employers. All the Grant family was covered by health insurance that was provided by Bob's primary employer, National Storage. The family did not make any contributions.

The Grants also received the following during the year:

Interest income from First Kentucky Bank $\backslash$$$130$

Interest income from City of Lexington, KY Bond $\backslash$$$450$

Interest income from U$.$S$.$ Treasury Bond $\backslash (\backslash$$ $675\backslash )$

Interest income from Nevada State Bond $\backslash$$$150$

Workers' compensation payments to Bob $\backslash (\backslash$$ $4,350\backslash )$

Gambling winnings from Oxford Casino for Melissa winning at the slots $\backslash$$$2,300$

Short Term Disability payments received by Bob due to injury $\backslash (\backslash$$ $3,500\backslash )$

$-$ Bob purchased and paid for premiums on the insurance policy himself.

Melissa received the following payments due to a lawsuit she filed for damages sustained in a car accident:

$-$ Medical Expenses for physical injuries

$\backslash (\backslash$$ $20,500\backslash )$

$-$ Emotional Distress $($from having been physically injured$)\backslash (\backslash$$ $60,000\backslash )$

$-$ Punitive Damages

Total

$\backslash (\backslash$$ $10,000\backslash )$

$\backslash (\backslash$$ $90,500\backslash )$

Eight years ago, Melissa purchased an annuity contract for $\backslash (\backslash$$ $100,000\backslash ).$ She received her first annuity payment on January $1,2024$

$.$ The annuity will pay Melissa $\backslash$$$20,000$ per year for fifteen years $($beginning with this year$).$ Report as Pensions $\backslash$& Annuities.

During $2024,$ they received a refund of Kentucky taxes paid in $2023.$ The refund was $\backslash (\backslash$$ $700\backslash )$ and they claimed the standard deduction in $2023.$

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