Scenario: Kevin and Jill Smith are married. They have two wonderful children: Lauren (21) and Carter (15) and one grandchild Ella (3) (Lauren's daughter). Both Lauren and Ella moved back in with them in March of 2023 because she lost her job. Luckily, Lauren was able to get a part-time job at Walmart where she made $7,000. The Smith's also had Jill's friend Tina Kent living with them. Tina was struggling to make ends meet, so they let her move in with them in January of 2023. Tina worked as a waitress and made $3,500 in 2023. The Smith's provided support for all the people living in their house. They have provided you with the following information and would like you to prepare their 2023 Tax Return.

• In January of 2023, the Smith's sold their home. They purchased the home for $250,000 as a fixer upper and sold the home for $550,000 after making several renovations. They lived in the home since they purchased it in 2020.
• New address: 65 Township Road 1199, Chesapeake, Ohio 45659. Here are the social security numbers: Kevin 111-11-1111, Jill 222-22-2222, Lauren 333-33-3333, Ella 444-44-444, Carter 555-55-5555, and Tina 777-77-7777.
• The Smith's received life insurance proceeds of $100,000 when Jill's mother passed away in September of 2023.
• Jill is a home inspector and owner of Inspections R Us. Her gross revenue from the business was $550,000 for 2023.
• Jill incurred the following expenses in connection with her business. (Assume she would be eligible for a QBI deduction, so take 20% of Net Profit on Schedule C as the deduction.)

oPaid her contractors $170,000

oRent on her office space $65,000

oOffice supplies of $30,000

oPenalties on late tax payments of $2,500

oFees paid for specialized software $7,000

oCampaign contribution to her friend $11,000

oMold Detection Machine - made Section 179 Election - $15,000

oBusiness meals with clients to discuss results $8,000

oTravel to a conference for continuing education $5,600

• Kevin worked as a school teacher. The school sent him a W-2 that showed wages of $50,000, federal withholding of $12,000, Social Security tax of $3,500, Medicare tax of $2,500, and state withholding of $3,500. He paid $300 for classroom supplies.
• The Smiths own some rental property. They had gross rental income of $160,000.
• The Smiths incurred the following expenses associated with their rental:

o Depreciation of $15,000

o Mortgage interest of $13,500

o Property taxes of $7,500

o Repairs of $45,000

o Legal fees of $5,200

o Pest Control of $4,000

• They have a CD at the local bank which paid them interest of $19,500. They also received $7,000 worth of interest from a municipal bond.
• They paid $20,500 of mortgage interest (acquisition indebtedness) on their personal home.
• They made charitable contributions of $25,500 to their church.
• They paid property taxes on their personal home of $10,500.
• Kevin was awarded a legal settlement: $20,000 for punitive damages and $6,000 for emotional distress.
• Jill paid her former spouse alimony of $35,000. The divorce occurred after tax reform.
• They made federal estimated tax payments of $15,600.
• They sold some AT&T stock they had held for six years at a gain of $12,400. (Ignore preferential rates)
• They had unreimbursed medical expenses of $32,000.
• Kevin had gambling winnings of $15,000 and $20,000 of losses.
• They want to take the Child Tax Credit of $2,000 or Other Dependent Credit of $500 if they qualify. (Ignore AGI Phase Outs)
• Jill wants you to calculate her SE Tax and QBI (20% of income from Schedule C).
• Ignore All AGI Phase Outs and Preferential Rates