Payment to Melissa as a result of a lawsuit for damages she sustained in a car accident: Medical Expenses $2,500 Emotional Distress associated with physical injuries $12,000 Punitive Damages $10,000 Total $24,500 Eight years ago, Melissa purchased an annuity contract for $80,000. This year, she received her first payment on the annuity. The payment amount was $16,000. The annuity started to pay on January 1 and she received a full first year's payment. It will pay her $16,000 per year for ten years (beginning with this year). In 2018, they also received $420 of Kentucky state income tax refund. They took itemized deduction in 2016 and the amount of the total itemized deduction in 2016 is $31,878. The Grants also placed $455 in the Kentucky Derby and won $2,725 from their tickets. The Grants paid or incurred the following expenses during the year: $ 625 Dentist/Orthodontist (not paid by insurance) $13,000 Doctors (not paid by insurance) Prescriptions (not paid by insurance) $ 380 Real property taxes on residence $1,800 Mortgage interest on principal residence $8,560 Contribution to the Red Cross (Qualified charity) $1,000 Contribution to Senator Rick Hartley's Re-election Campaign $2,500 Contribution to First Baptist Church of Kentucky (Qualified Charity)_$6,000 Fee paid to Jones & Company, CPAs for tax preparation $200 In addition, Bob paid $1,000 to Bank of America for the interest on his student loan (Hint: Textbook Exhibit 6-4) During the year, the Grants' personal residence was flooded by a federally declared disaster in September of the current year. Their personal-use properties lost in the casualty are: Item Purchase Date | Decline in FMV Tax Basis of Item Insurance Reimbursement Received 500 09/01/2013 3,000 3,000 Laptop computer and Printer Rifle TV/Projector 2005 Honda Pilot 03/01/2010 03/01/2010 07/01/2011 12,000 5,000 4,000 12,500 13,000 6,500 500 1,000 500 Please complete the federal individual income tax return forms for the following taxpayer. Unless Instructed otherwise, the information provided is for the taxpayer's 2018 tax year. Please complete his 2018 tax return. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. Bob and Melissa Grant are married and live in Lexington, Kentucky. The Grants have 17-year old twin daughters. The Grants would like to file a joint tax return for the year. The following information relates to the Grant's tax year: Bob's Social Security number is 987-45-1234 Melissa's Social Security number is 494-37-4893 Jane's Social Security number is 412-32-5690 Anna's Social Security number is 412-32-6940 The Grants' mailing address is 95 Hickory Road, Lexington, Kentucky 40502 Jane and Anna are tax dependents for federal tax purposes Bob Grant received the following during the year: Employer Gross Wages Federal Income Tax Withholding $12,000 State Income Tax Withholding $2,750 University of Kentucky $77,450 Melissa Grant received the following during the year: Employer Gross Wages Federal Income Tax State Income Tax Withholding Withholding Jensen Photography $29,500 $2,450 $1,600 All applicable and appropriate payroll taxes were withheld by Grants' respective employers. The Grants also received the following during the year: Interest Income from First Kentucky Bank Interest Income from City of Lexington, KY Bond Interest Income from U.S. Treasury Bond Interest Income from Nevada State School Board Bond $580 $450 $825 $150 Disability insurance payments received by Bob on account of injury 3,500 Bob's employer paid for the insurance policy issued by Aflac (NYSE AFL) as part of the tax-free fringe benefits Payment to Melissa as a result of a lawsuit for damages she sustained in a car accident: Medical Expenses $2,500 Emotional Distress associated with physical injuries $12,000 Punitive Damages $10,000 Total $24,500 Eight years ago, Melissa purchased an annuity contract for $80,000. This year, she received her first payment on the annuity. The payment amount was $16,000. The annuity started to pay on January 1 and she received a full first year's payment. It will pay her $16,000 per year for ten years (beginning with this year). In 2018, they also received $420 of Kentucky state income tax refund. They took itemized deduction in 2016 and the amount of the total itemized deduction in 2016 is $31,878. The Grants also placed $455 in the Kentucky Derby and won $2,725 from their tickets. The Grants paid or incurred the following expenses during the year: $ 625 Dentist/Orthodontist (not paid by insurance) $13,000 Doctors (not paid by insurance) Prescriptions (not paid by insurance) $ 380 Real property taxes on residence $1,800 Mortgage interest on principal residence $8,560 Contribution to the Red Cross (Qualified charity) $1,000 Contribution to Senator Rick Hartley's Re-election Campaign $2,500 Contribution to First Baptist Church of Kentucky (Qualified Charity)_$6,000 Fee paid to Jones & Company, CPAs for tax preparation $200 In addition, Bob paid $1,000 to Bank of America for the interest on his student loan (Hint: Textbook Exhibit 6-4) During the year, the Grants' personal residence was flooded by a federally declared disaster in September of the current year. Their personal-use properties lost in the casualty are: Item Purchase Date | Decline in FMV Tax Basis of Item Insurance Reimbursement Received 500 09/01/2013 3,000 3,000 Laptop computer and Printer Rifle TV/Projector 2005 Honda Pilot 03/01/2010 03/01/2010 07/01/2011 12,000 5,000 4,000 12,500 13,000 6,500 500 1,000 500 Please complete the federal individual income tax return forms for the following taxpayer. Unless Instructed otherwise, the information provided is for the taxpayer's 2018 tax year. Please complete his 2018 tax return. Ignore the requirement to attach the form(s) W-2 to the front page of the Form 1040. If required information is missing, use reasonable assumptions to fill in the gaps. Bob and Melissa Grant are married and live in Lexington, Kentucky. The Grants have 17-year old twin daughters. The Grants would like to file a joint tax return for the year. The following information relates to the Grant's tax year: Bob's Social Security number is 987-45-1234 Melissa's Social Security number is 494-37-4893 Jane's Social Security number is 412-32-5690 Anna's Social Security number is 412-32-6940 The Grants' mailing address is 95 Hickory Road, Lexington, Kentucky 40502 Jane and Anna are tax dependents for federal tax purposes Bob Grant received the following during the year: Employer Gross Wages Federal Income Tax Withholding $12,000 State Income Tax Withholding $2,750 University of Kentucky $77,450 Melissa Grant received the following during the year: Employer Gross Wages Federal Income Tax State Income Tax Withholding Withholding Jensen Photography $29,500 $2,450 $1,600 All applicable and appropriate payroll taxes were withheld by Grants' respective employers. The Grants also received the following during the year: Interest Income from First Kentucky Bank Interest Income from City of Lexington, KY Bond Interest Income from U.S. Treasury Bond Interest Income from Nevada State School Board Bond $580 $450 $825 $150 Disability insurance payments received by Bob on account of injury 3,500 Bob's employer paid for the insurance policy issued by Aflac (NYSE AFL) as part of the tax-free fringe benefits