Please complete the federal individual income tax return forms for the following taxpayer. Unless instructed otherwise, the information provided is for the taxpayers 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 Grants tax year:

• Bobs Social Security number is 987-45-1234

• Melissas Social Security number is 494-37-4893

• Janes Social Security number is 412-32-5690

• Annas 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	State Income Tax Withholding
University of Kentucky	$77,450	$12,000	$2,750

Melissa Grant received the following during the year:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax 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 $580

Interest Income from City of Lexington, KY Bond $450

Interest Income from U.S. Treasury Bond $825

Interest Income from Nevada State School Board Bond $150

Disability insurance payments received by Bob on account of injury 3,500

• Bobs 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 years 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:

Dentist/Orthodontist (not paid by insurance) $13,000

Doctors (not paid by insurance) $ 625

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 Hartleys 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
Laptop computer and Printer	09/01/2013	3,000	3,000	500
Rifle	03/01/2010	12,000	12,500	500
TV/Projector	03/01/2010	5,000	13,000	1,000
2005 Honda Pilot	07/01/2011	4,000	6,500	500

The Grants do not want to contribute to the Presidential Election Campaign. The Grants would like to receive a refund (if any) of any tax they may have overpaid for the year. Their preferred method of receiving the refund is by check.