ACCT 3221 Income Taxation 1 Assignment Project 2026 | TRU Canada

ACCT 3221 Assignment Project

Tax Project

Based on the information provided below, complete a 2025y Form 1040 and any supporting schedules/forms for Bob and Melissa Grant. You should complete this tax return manually using the forms available from the IRS website, www.irs.gov. You may not use software to assist in preparing the forms. You may find the form instructions helpful in completing this assignment. Do not calculate AMT nor a State Return. The 1040 and all supporting documents must be typed, neat, and professional, and submitted as a single PDF file. One hundred points are assigned to this project.

Due Date

Project is due no later than Sunday, February 22nd 2026 at 11:59 pm.

Instructions

• You are to work on this assignment individually.

• Working on this assignment or discussing it with others is not permitted.

• Please include your name in the paid preparer’s box of the 1040.

Taxpayer Information

Bob (age 43) and Melissa (age 41) Grant are married and live in Lexington, Kentucky.
The Grants have three children:

• Robert (age 21, college student)

• Jared (age 10)

• Judy (age 9)

The Grants would like to file a joint tax return for the year.

Social Security Numbers

• Bob’s Social Security number is 987-45-1234

• Melissa’s Social Security number is 494-37-4883

• Robert’s Social Security number is 412-32-4690

• Jared’s Social Security number is 412-32-5690

• Judy’s Social Security number is 412-32-7690

Address

The Grants’ mailing address is:
95 Hickory Road, Lexington, Kentucky 40502

Dependents

Robert, Jared, and Judy are tax dependents for federal tax purposes.

Bob Grant – Wage Income

Melissa Grant – Wage Income

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

Melissa’s Photography Business (2023)

Income:

• Weddings and Receptions: $40,000 in fees

• Photo Restorations: $5,000 in fees

• Family Portraits: $5,000 in fees

Expenses:

• Photography Supplies: $10,000

• Mileage: 1,000 miles

• Office Supplies: $2,000

• Props and Backgrounds: $2,000

• Advertising: $1,000

• Camera and Lenses: $5,000

Education Expenses

The Grants paid $10,000 to the University of Kentucky for Robert’s tuition and fees in 2023.

Stock Sale Information

The Grants sold 1,000 shares of ExxonMobil stock on July 1, 2023.

• Purchase Date: January 1, 2010

• Purchase Price: $20 per share

• Selling Price: $70 per share

• Commissions and Fees: $20 per share

Other Income Received

• Interest Income from First Kentucky Bank $6,000

• Interest Income from City of Lexington, KY Bonds $3,000

• Interest Income from U.S. Treasury Bonds $7,000

• Interest Income from Nevada State School Board Bonds $3,000

• Workers’ Compensation payments to Bob $10,000

Disability Payments

Disability payments received by Bob on account of injury $20,000

• National Storage paid 100% of premiums the premiums on the policy and included the premium payments in Bob’s taxable wages

Lawsuit Settlement (Melissa)

Melissa received the following funds as a result of a lawsuit for damages sustained in a car accident:

• Medical Expenses $30,000

• Emotional Distress $40,000

• Punitive Damages $100,000

Raffle Prize

December 12, 2023 was the Grant’s lucky day! They won a raffle prize of a new 2024 Ford Mustang convertible valued at $80,000. They paid 10% in Federal income taxes and 5% in state income taxes of the value of the car.

Inheritance

Bob received an inheritance from his favorite uncle, James Robert, in the amount of $300,000 in cash, on November 30, 2023.

Rental Income

The Grant’s rent a garage apartment to Robert’s best friend, Ricky, for $3,000 a month.

• Total expenses for the year were $10,000, which consisted of utilities only.

• Depreciation for the year on the apartment is $5,000.

Alimony

Bob paid his ex-wife $15,000 in alimony in 2023.
They divorced in 2015.

Annuity Income

Five years ago, Melissa purchased an annuity contract for $70,000. This year, she received her first payment on the annuity.

• Payment amount was $10,000

• The annuity started to pay on January 1

• She received a full first year’s payment

• It will pay her $10,000 per year for ten years (beginning with this year)

• The $10,000 payment was reported to Melissa on form 1099-R for the current year

Foreign Accounts

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.

Expenses Paid During the Year

• Dentist/Orthodontist (unreimbursed by insurance) $5.000

• Doctors (unreimbursed by insurance) $2,000

• Prescriptions (unreimbursed by insurance) $1,000

• KY state tax payment made on 4/15/23 for 2022 tax liability $4,000

• Real property taxes on residence $8,000

• Vehicle property tax based upon age of vehicle $1,000

• Mortgage interest on principal residence $30,000

• Interest paid on borrowed money to purchase the City of Lexington, KY municipal bonds $2,000

• Interest paid on borrowed money to purchase U.S. Treasury bonds $5,000

• Contribution to the Red Cross $7,000

• Contribution to Senator Rick Taylor’s Re-election Campaign $2,000

• Contribution to First Church of Kentucky $12,000

• Fees paid to Jones & Company, CPAs for tax preparation $500

Mileage Information

• Bob drove 12,000 miles commuting to work

• Melissa drove 8,000 miles commuting to work

• Both the Grants have represented to you that they maintained careful logs to support their respective mileage

• The Grants drove 1,000 miles in total to receive medical treatment at hospitals and doctor offices in 2023

Additional Information

• 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.

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