Note: This problem is for the 2023 tax year.

Daniel B. Butler and his spouse Freida C. Butler file a joint return. The Butlers live at 625 Oak Street in Corbin, KY 40701. Dan's Social Security number is 111-11-1112, and Freida's is 123-45-6780. Dan was born on January 15, 1972, and Freida was born on August 20, 1972.

During 2023, Dan and Freida furnished over half of the total support of each of the following individuals, all of whom still live at home:

1. Gina, their daughter, age 22, a full-time student, who married on December 21, has no income of her own and did not file a joint return with her husband, Casey, who earned $10,600 during 2023. Gina's Social Security number is 123-45-6788.
2. Willie, their son, age 19, graduated high school in May 2023. He is taking a leap year and will not begin college until 2024. He had gross income of $6,300 in 2023. Willie's Social Security number is 123-45-6787.
3. Ben, their oldest son, age 26, is a full-time graduate student with gross income of $5,200. Ben's Social Security number is 123-45-6786.

Dan was employed as a manager by WJJJ, Inc. (employer identification number 11-1111111, 604 Franklin Street, Corbin, KY 40702), and Freida was employed as a salesperson for Corbin Realty, Inc. (employer identification number 98-7654321, 899 Central Street, Corbin, KY 40701). Selected information from the W-2 forms provided by the employers is presented below. Dan and Freida use the cash method.

Line	Description	Dan	Freida
1	Wages, tips, other compensation	$74,000	$86,000
2	Federal income tax withheld	11,000	12,400
17	State income tax withheld	2,960	3,440

Freida sold a house on December 30, 2023, and will be paid a commission of $3,100 (not included in the $86,000 reported on the W-2) on the January 10, 2024, closing date.

Other income (as reported on 1099 Forms) for 2023 consisted of the following:

Dividends on CSX stock (qualified)		$4,200
Interest on savings at Second Bank		1,600
Interest on City of Corbin bonds		900
Interest on First Bank CD		382

The $382 from First Bank was an original issue discount. Dan and Freida collected $16,000 on the First Bank CD that matured on September 30, 2023. The CD was purchased on October 1, 2020, for $14,995, and the yield to maturity was 3.3%.

Dan participated on a game show and won a cash prize of $7,000.

In addition to the above information, Dan and Freida's itemized deductions included the following:

Paid on 2023 Kentucky income tax		$700
Personal property tax paid		600
Real estate taxes paid		1,800
Interest on home mortgage (Corbin S&L)		4,900

Sales tax from the sales tax table is $1,860. Dan and Freida made Federal estimated tax payments of $6,000. They have never owned or used any digital assets, and they do not wish to contribute to the Presidential Election Campaign. The Kentucky income tax rate is 4%.

Required:

Compute Dan and Freida's 2023 Federal income tax payable (or refund due). Use Form 1040 and Schedules 1, B, 8812 and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return. If there is a tax overpayment, the Butlers would like a refund. If additional tax is due, assume no underpayment penalty applies.

It may be necessary to complete the tax schedules before completing Form 1040.

• Enter all amounts as positive numbers.
• If an amount box does not require an entry or the answer is zero, enter "0".
• When computing the tax liability, do not round your immediate calculations.
• If required, round your answers to the nearest dollar.
• Make realistic assumptions about any missing data.
• Use the Tax Rate Schedule provided. Do not use the Tax Tables.

Schedule 1

Question Content Area

Complete the Butlers' Schedule 1 below for 2023.

SCHEDULE 1 (Form 1040) Department of the Treasury Internal Revenue Service	Additional Income and Adjustments to Income Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/Form1040 for instructions and the latest information.	OMB No. 1545-0074
2023 Attachment Sequence No. 01

Name(s) shown on Form 1040, 1040-SR, or 1040-NR Daniel and Freida C Butler

Your social security number 111-11-1112

Part I

Additional Income

1	Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
2a	Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2a
b	Date of original divorce or separation agreement (see instructions):
3	Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
4	Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5	Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E . . . . . . . . . . . . . . .	5
6	Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7	Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
8	Other income:
a	Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8a	()
b	Gambling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8b
c	Cancellation of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8c
d	Foreign earned income exclusion from Form 2555 . . . . . . . . . . . . . . . . . . . . . . .	8d	()
e	Income from Form 8853 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8e
f	Income from Form 8889 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8f
g	Alaska Permanent Fund dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8g
h	Jury duty pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8h
i	Prizes and awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8i	fill in the blank f84c1cfc502f018_1
j	Activity not engaged in for profit income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8j
k	Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8k
l	Income from the rental of personal property if you engaged in the rental for profit but were not in the business of renting such property . . . . . . . . . . . . . . . . . . . . .	8l
m	Olympic and Paralympic medals and USOC prize money (see instructions) . . . . . .	8m
n	Section 951(a) inclusion (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8n
o	Section 951A(a) inclusion (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . .	8o
p	Section 461(l) excess business loss adjustment . . . . . . . . . . . . . . . . . . . . . . . . .	8p
q	Taxable distributions from an ABLE account (see instructions) . . . . . . . . . . . . . . .	8q
r	Scholarship and fellowship grants not reported on Form W-2 . . . . . . . . . . . . . . .	8r
s	Nontaxable amount of Medicaid waiver payments included on Form 1040, line 1a or 1d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8s	()
t	Pension or annuity from a nonqualifed deferred compensation plan or a nongovernmental section 457 plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8t
u	Wages earned while incarcerated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8u
z	Other income. List type and amount:
		8z
9	Total other income. Add lines 8a through 8z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9	fill in the blank f84c1cfc502f018_2
10	Combine lines 1 through 7 and 9. This is your additional income. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10	fill in the blank f84c1cfc502f018_3

For Paperwork Reduction Act Notice, see your tax return instructions.

Schedule 1 (Form 1040) 2023

Schedule 1 (Form 1040) (2023)

Daniel and Freida C Butler

111-11-1112

Page 2

Part II

Adjustments to Income

11	Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
12	Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
13	Health savings account deduction. Attach Form 8889 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
14	Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
15	Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
16	Self-employed SEP, SIMPLE, and qualified plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
17	Self-employed health insurance deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
18	Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
19a	Alimony paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19a
b	Recipient's SSN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c	Date of original divorce or separation agreement (see instructions):
20	IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
21	Student loan interest deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
22	Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
23	Archer MSA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
24	Other adjustments:
a	Jury duty pay (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24a
b	Deductible expenses related to income reported on line 8l from the rental of personal property engaged in for profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24b
c	Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24c
d	Reforestation amortization and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24d
e	Repayment of supplemental unemployment benefits under the Trade Act of 1974 . .	24e
f	Contributions to section 501(c)(18)(D) pension plans . . . . . . . . . . . . . . . . . . . . . .	24f
g	Contributions by certain chaplains to section 403(b) plans . . . . . . . . . . . . . . . . . .	24g
h	Attorney fees and court costs for actions involving certain unlawful discrimination claims (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24h
i	Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations . . . . . . . . .	24i
j	Housing deduction from Form 2555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24j
k	Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041) . . . . .	24k
z	Other adjustments. List type and amount:
		24z
25	Total other adjustments. Add lines 24a through 24z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
26	Add lines 11 through 23 and 25. These are your adjustments to income. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26	fill in the blank f84c1cfc502f018_4
Schedule 1 (Form 1040) 2023

2023 Tax Rate Schedules

Question Content Area

Use the 2023 Tax Rate Schedules to compute the tax. (Note: Because the tax rate schedules are used instead of the tax tables, the amount of tax computed may vary slightly from the amount listed in the tables.)

2023 Tax Rate Schedules
SingleSchedule X	Head of householdSchedule Z
If taxable income is: Over		But not over		The tax is:		of the amount over			If taxable income is: Over		But not over		The tax is:		of the amount over
$ 0		$ 11,000		. . . . . .	10%		$ 0			$ 0		$ 15,700		. . . . . .	10%		$ 0
11,000		44,725		$ 1,100.00	+	12%		11,000			15,700		59,850		$ 1,570.00	+	12%		15,700
44,725		95,375		5,147.00	+	22%		44,725			59,850		95,350		6,868.00	+	22%		59,850
95,375		182,100		16,290.00	+	24%		95,375			95,350		182,100		14,678.00	+	24%		95,350
182,100		231,250		37,104.00	+	32%		182,100			182,100		231,250		35,498.00	+	32%		182,100
231,250		578,125		52,832.00	+	35%		231,250			231,250		578,100		51,226.00	+	35%		231,250
578,125		. . . . . .		174,238.25	+	37%		578,125			578,100		. . . . . .		172,623.50	+	37%		578,100
Married filing jointly or Qualifying widow(er)Schedule Y-1	Married filing separatelySchedule Y-2
If taxable income is: Over		But not over		The tax is:		of the amount over			If taxable income is: Over		But not over		The tax is:		of the amount over
$ 0		$ 22,000		. . . . . .	10%		$ 0			$ 0		$ 11,000		. . . . . .	10%		$ 0
22,000		89,450		$ 2,200.00	+	12%		22,000			11,000		44,725		$ 1,100.00	+	12%		11,000
89,450		190,750		10,294.00	+	22%		89,450			44,725		95,375		5,147.00	+	22%		44,725
190,750		364,200		32,580.00	+	24%		190,750			95,375		182,100		16,290.00	+	24%		95,375
364,200		462,500		74,208.00	+	32%		364,200			182,100		231,250		37,104.00	+	32%		182,100
462,500		693,750		105,664.00	+	35%		462,500			231,250		346,875		52,832.00	+	35%		231,250
693,750		. . . . . .		186,601.50	+	37%		693,750			346,875		. . . . . .		93,300.75	+	37%		346,875