Hello, I need some help answering this exercise about Income Taxes 2023. Im Stuck in Schedule A, and Schedule 3. Can somebody guide me and give me a step-by-step answer, please?

Comprehensive Problem 1 - Part 1: Taxpayer information, Form 1040, Schedules 1, 2, and 3, Schedule A, and Schedule B.

Noah and Joan Arc's Tax Return

Note: This problem is divided into three 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.

Noah and Joan Arc live with their family in Dayton, OH. Noahs Social Security number is 434-11-3311. Noah was born on February 22, 1987, and Joan was born on July 1, 1988. Both enjoy good health and eyesight. Noah owns and operates a pet store, and Joan is a firefighter for the city of Dayton.

1. The Arcs have two children, a son named Shem (Social Security number 598-01-2345), born on March 21, 2015, and a daughter named Nora (Social Security number 554-33-2411), born on December 3, 2018.

2. Joan and Noah brought a folder of tax documents (see Forms W-2 and 1098). In addition, they received a Substitute 1099 Statement from Charlotte Squab Financial Services (located on a separate tab) regarding their stock transactions for the year.

3. Noahs pet store is located at 1415 S. Patterson Blvd, Dayton, OH 45409. The name of the store is The Arc and its taxpayer identification number is 95-9876556. Since you handle Noahs bookkeeping, you have printed the income statement from your Quickbooks software, shown in the table below.

The Arc 95-9876556 Income Statement For the Year Ended December 31, 2022
Revenue:
	Gross Sales			$150,000.00
	Less: Sales Returns and Allowances			-
	Net Sales			$150,000.00
Cost of Goods Sold:
	Beginning Inventory	$11,000.00
	Add: Purchases	66,000.00
		$77,000.00
	Less: Ending Inventory	10,000.00
	Cost of Goods Sold			67,000.00
	Gross Profit (Loss)			$83,000.00
Expenses:
	Dues and Subscriptions	-
	Estimated Federal Tax Payments	4,000.00
	Estimated State Tax Payments	3,800.00
	Insurance	4,000.00
	Meals and Entertainment	1,600.00
	Miscellaneous	300.00
	Payroll Taxes	4,000.00
	Professional Fees	1,800.00
	Rent	8,500.00
	Travel	1,300.00
	Utilities	1,500.00
	Vehicle Expenses	-
	Wages	25,000.00
	Total Expenses			55,800.00
	Net Operating Income			$27,200.00

4. Details of The Arcs meals and entertainment:

Restaurant meals associated with business travel	$500
Arc employee holiday party	300
Restaurant overtime meals for employees	200
Sports tickets for entertaining large customers	600
	$1,600

5. Travel costs are business related and do not include meals. Miscellaneous expense is a $300 contribution to Re-elect Goldie Wilson, Mayor of Dayton.

6. Noah and Joan paid the following amounts during the year (all by check):

Contributions to Re-elect Goldie Wilson, Mayor of Dayton	$250
Church donations (for which a written acknowledgment was received)	5,000
Real estate taxes on their home	2,400
Medical co-pays for doctor visits	700
Mortgage interest for purchase of home (See Form 1098)
Tax return preparation fees	350
Credit card interest	220
Automobile insurance premiums	600
Uniforms for Joan	125
Contribution to Noah's individual retirement account (made on April 1, 2023)	5,000

7. Noah has a long-term capital loss carryover from last year of $1,300.

8. Noah and Joan own a condo and use it as a rental property. The condo is located at 16 Oakwood Ave, Unit A, Dayton, OH 45409. Noah provides the management services for the rental including selection of tenants, maintenance, repairs, rent collection, and other services as needed. On average, Noah spends about two hours per week on the rental activity. The revenue and expenses for the year are as follows:

Rental income	$16,200
Insurance	800
Interest expense	5,800
Property taxes	1,500
Miscellaneous expenses	500

Rental income includes $1,150 per month for two months under the previous lease (which ended February 28, 2022). The new lease is $1,300 per month for ten months under the new lease but the tenant paid only $900 in May 2022 because the tenant paid $400 for repairs to the apartment, and with the Arcs permission, reduced Mays rent by $400. The new lease also required the tenant to pay last months $1,300 rent in February 2022. The home was acquired for $85,000 in 2006. On May 12, 2022, the Arcs installed new fixtures (7-year recovery period) at a cost of $3,500. They wish to maximize the cost recovery on the new fixtures but make no elections.

9. The Arcs paid Ohio general sales tax of $1,076 during the year.

Required: You are to prepare the Arcs' federal income tax return in good form. You are not to complete an Ohio state income tax return. The following forms and schedules are required and may be found in parts 1, 2, or 3:

Part 1	Part 2	Part 3
Form 1040	Schedule C	Form 2441 (Only page 1 is required)
Schedule 1	Schedule D	Schedule E
Schedule 2	Schedule SE	Form 4562
Schedule 3	Qualified Dividends and Capital Gain Tax Worksheet	Schedule 8812
Schedule A		Form 8995
Schedule B

• Neither taxpayer wants to make a contribution to the presidential election campaign.
• The taxpayers elect to use the foreign tax credit in lieu of the deduction.
• 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".
• If required, round your answers to the nearest dollar. On Schedule SE, use the rounded amounts in subsequent computations.
• Make realistic assumptions about any missing data that you may need.

Dividends
Payor	Box 1a Ordinary Dividends	Box 1b Qualified Dividends	Box 2a Cap Gain Distrib	Box 4 Federal Income Tax withheld	Box 7 Foreign Tax Paid	Box 11 Tax-exempt Dividends
ExxonMobil	350.00	350.00	0.00	0.00	0.00	0.00
Texas Util.	1,200.00	1,200.00	0.00	0.00	0.00	0.00
CS Growth Fund	395.00	380.00	250.00	0.00	30.00	0.00

Stock Transactions Box 1a	Box 1b	Box 1c	Box 1d	Box 1e	Box 2
Description	Date Acq.	Date Sold	Net Proceeds	Basis (reported to IRS)	Character
100 shs. Blue Corp.	02/11/2012	08/15/2022	4,700.00	2,700.00	LT
50 shs. Yellow Corp.	01/13/2022	06/05/2022	6,000.00	5,500.00	ST
25 shs. Red Co.	10/02/2013	10/07/2022	12,000.00	2,000.00	LT

RoundUp Day Care Center

Date of service	Amount Paid	Child
January 1, 2022 December 31, 2022	$7,000.00	Nora Arc

SCHEDULE 3 (Form 1040) Department of the Treasury internal Revenue Service Additional Credits and Payments Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/Form 1040 for instructions and the latest information. OMB No. 1545-0074 2022 Attachment Sequence No. 03 Vame(s) shown on Form 1040, 1040-SR, or 1040-NR Noah and Joan Arc Your social security number 434-11-3311 Part I Nonrefundable Credits 1 Foreign tax credit. Attach Form 1116 if required. 2 Credit for child and dependent care expenses from Form 2441, line 11. Attach Form 2441. . . . 3 Education credits from Form 8863, line 19 4 Retirement savings contributions credit. Attach Form 8880 5 Residential energy credits. Attach Form 5695 6 Other nonrefundable credits: a General business credit. Attach Form 3800 6a \begin{tabular}{|l|l} 1 & 30 \\ \hline 2 & \\ \hline 3 & \\ \hline 4 & \\ \hline 5 & \\ \hline & \\ \hline & \\ \hline \end{tabular} Taxes You Paid 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box b State and local real estate taxes (see instructions) . . . . . . . C State and local personal property taxes .. e Enter the smaller of line 5d or $10,000($5,000 if married filing separately) 6 Other taxes. List type and amount 5a 5b 5c 5d 5 e 6 2,200 2,400 7 Add lines 5 and 6 7 SCHEDULE 3 (Form 1040) Department of the Treasury internal Revenue Service Additional Credits and Payments Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/Form 1040 for instructions and the latest information. OMB No. 1545-0074 2022 Attachment Sequence No. 03 Vame(s) shown on Form 1040, 1040-SR, or 1040-NR Noah and Joan Arc Your social security number 434-11-3311 Part I Nonrefundable Credits 1 Foreign tax credit. Attach Form 1116 if required. 2 Credit for child and dependent care expenses from Form 2441, line 11. Attach Form 2441. . . . 3 Education credits from Form 8863, line 19 4 Retirement savings contributions credit. Attach Form 8880 5 Residential energy credits. Attach Form 5695 6 Other nonrefundable credits: a General business credit. Attach Form 3800 6a \begin{tabular}{|l|l} 1 & 30 \\ \hline 2 & \\ \hline 3 & \\ \hline 4 & \\ \hline 5 & \\ \hline & \\ \hline & \\ \hline \end{tabular} Taxes You Paid 5 State and local taxes. a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box b State and local real estate taxes (see instructions) . . . . . . . C State and local personal property taxes .. e Enter the smaller of line 5d or $10,000($5,000 if married filing separately) 6 Other taxes. List type and amount 5a 5b 5c 5d 5 e 6 2,200 2,400 7 Add lines 5 and 6 7