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

Bob Grant's Forms W$-2$ provided the following wages and withholding for the year:

Melissa Grant's Form W$-2$ provided the following wages and withholding for the year:

All applicable and appropriate payroll taxes were withheld by the Grants' respective employers.

All the Grant family was covered by minimum essential health insurance during each month in

The insurance was provided by Bob's primary employer, National Storage.

The Grants also received the following during the year:

Interest income from First Kentucky Bank $$130$

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

Interest income from U$.$S$.$ Treasury Bond $$675$

Interest income from Nevada State School Board Bond $$150$

Qualified dividend from Huggies Company $$4,500$ Workers'

compensation payments to Bob $$4,350$ Disability payments received by

Bob due to injury $$3,500$

National Storage paid $100\%$ of the premiums on the policy and included the

premium payments in Bob's taxable wages

Melissa received the following payments due to a lawsuit she filed for damages sustained

in a car accident:

Medical Expenses for physical injuries $$2,500$

Emotional Distress $($from having been physically injured$)$ $$12,000$

Punitive Damages $$10,000$

Total $$24,500$

On January $1,2023($the prior year$),$ Melissa started a photography business in which she takes

bridal and wedding photographs. She does not do any of the professional printing. However, she

provides all the digital files to her clients on a password$-$protected web site as part of her service.

This unique service, along with her skill and reputation, has allowed her to earn additional

money on the weekends, primarily in the summer, Melissa rents all the camera equipment and

does not currently own any equipment herself. The photography business uses the cash method

of accounting. The business did not have any obligation to file a Form $1099$ to any payee during

the year. Melissa reported the following revenue and expenses for her business this year:

Gross Revenue $$15,000$

Photographic supplies $ $1,850$

Camera rental $ $2,550$

Web site hosting fee $$400$

The Grants did not own, control or manage any foreign bank accounts nor were they grantors or

beneficiaries of a foreign trust during the tax year. Also, the Grants did not buy, sell, exchange,

or otherwise dispose of any financial interest in any virtual currency.

The Grants paid or incurred the following expenses during the year:

Dentist$/$Orthodontist $($unreimbursed by insurance$)$ $ $10,500$ Doctor fees

$($unreimbursed by insurance$)$ $ $2,625$ Prescriptions $($unreimbursed by insurance$)$ $

$2,130$ KY state tax payment made on $4/15/2023$ for $2022$ tax return liability $

$1,350$ Real property taxes on residence $$3,800$ Vehicle registration taxes based on

age of vehicle $ $1,250$

Mortgage interest on principal residence $ $18,560$ Interest paid on borrowed money

to purchase the City of

Lexington, KY municipal bonds $ $400$ Interest paid on borrowed money to

purchase

U$.$S$.$ Treasury bonds $$240$ Contribution to the Red Cross $$1,000$

Contribution to Senator Rick Hartley's Re$-$election Campaign $ $2,500$

Contribution to First Baptist Church of Kentucky $ $6,000$ Fee paid to Jones &

Company, CPAs for tax preparation $$200$

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

Required:

Compute the Income Tax $2024$ Formula for Bob and Melissa Grant $(30$ points$)$ Use the

following information to complete Bob and Melissa Grant $2024$ federal income tax return.

FORM $1040$

Schedule $1$

Schedule $2$

Schedule A

Schedule C

Schedule SE