Reference no: EM131009508

Tax Return Project

Based on the information provided, you are to complete the appropriate 2014 individual tax form and any supporting schedules/forms for the Grants. You do not need to prepare a state tax return. You should complete this tax return by hand using the forms available from the IRS website, www.irs.gov. You can use Adobe (or similar program) to type your responses on the forms. You may not use tax return preparation software to assist in preparing the forms. You may find the form instructions helpful in completing this assignment. Please provide a list of assumptions you make, if any. I will grade your return subject to any reasonable assumptions listed. You do not need to calculate AMT.

You are to work on this assignment individually. Working on this assignment or discussing it with others is not permitted. Any collaboration will be considered a violation of the Academic Honesty Policy, which will result in a grade of zero on this assignment and reporting of the violation to the Dean's office.

Please include your name in the paid preparer's box at the bottom of the tax return. You do not need to include a cover page.

Instructions:

Please complete the 2014 federal income tax return for Bob and Melissa Grant.  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 (age 43) and Melissa Grant (age 43) 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 987-64-6452
• 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:

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
National Storage	$67,200	$8,500	$3,850
Lexington Little League	$2,710	0	0

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

Employer	Gross Wages	Federal Income Tax Withholding	State Income Tax Withholding
Jensen Photography	$24,500	$2,450	$1,225

All applicable and appropriate payroll taxes were withheld by the Grants' respective employers.  All of the Grant family was covered by minimum essential health insurance during each month in 2014.  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 $650

Interest income from U.S. Treasury Bond $675

Interest income from Nevada State School Board Bond $150

Workers' compensation payments to Bob $4,350

Disability payments received by Bob on account of 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 as a result of a lawsuit she filed for damages sustained in a car accident:

• Medical Expenses for physical injuries $3,500
• Emotional Distress (from having been physically injured) $12,000
• Punitive Damages $10,000

Total $24,500

Eight years ago, Melissa purchased an annuity contract for $88,000.  She received her first annuity payment on January 1, 2014.  The annuity will pay Melissa $15,000 per year for ten years (beginning with this year).  The $15,000 payment was reported to Melissa on Form 1099-R for the current year (box 7 contained an entry of "7" on the form).

The Grants did not own, control or manage any foreign bank accounts nor were they a grantor or beneficiary of a foreign trust during the tax year.

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

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

Doctor fees (unreimbursed by insurance) $ 825

Prescriptions (unreimbursed by insurance) $ 380

KY state tax payment made on 4/15/14 for 2013 tax return liability $ 1,350

Real property taxes on residence $ 1,600

Vehicle registration fee based upon age of vehicle $ 250

Mortgage interest on principal residence $ 8,560

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

In addition, Bob drove 6,750 miles commuting to work and Melissa drove 8,230 miles commuting to work.  The Grants have represented to you that they maintained careful logs to support their respective mileage.

The Grants drove 465 miles in total to receive medical treatment at a hospital in April. 

The Grants' personal residence was burglarized on October 1.  The theft occurred during the day while both the Grants were at work and their children were at school.  The Grants had the following personal-use property stolen:

Item	Purchase Date	Fair Value on Date of Theft	Tax Basis of Item	Insurance Reimbursement Received
Laptop computer and Printer	09/01/2014	3,000	3,000	500
Rifle	03/01/2012	2,000	2,500	500
TV/Projector	03/01/2012	5,000	13,000	1,000
2007 Honda Pilot	07/01/2013	4,000	6,500	500
Total		14,000	25,000	2,500

The Grants 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.