Timpanogos Inc. is an accrual-method calendar-year corporation. For 2018, it reported financial statement income after taxes of $1,152,000. Timpanogos provided the following information relating to its 2018 activities Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds issued in 2017 Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2018 Rental income payments received in 2017 but earned in 2018 Rental income payments received in 2018 but not earned by year-end MACRS depreciation Book Depreciation Net capital loss Federal income tax expense for books in 2018 $ 200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000 55,000 25,000 42,000 500,000 Required a. Reconcile book income to taxable income for Timpanogos Inc. Be sure to start with book income and identify all of the adjustments necessary to arrive at taxable income b. Identify each book-tax difference as either permanent (P) or temporary (T). c. Complete Schedule M-1 for Timpanogos d. Compute Timpanogos Incs tax liability for 2018 Req A and B Req C Req D Reconcile book income to taxable income for Timpanogos Inc. Be sure to start with book income and identify all of the adjustments necessary to arrive at t Identify each book-tax difference as either permanent (P) or temporary (T). (Negative amounts should be indicated by a minus sign.) Book Taxable Description Book-tax adjustments Income (Dr) Cr 2,000,000 300,000) 1,700,000 Income (Dr) Cr 2,000,000 (Dr) Cr Revenue from sales Cost of goods sold Gross profit 300,000) $ 1,700,000 Other income Life insurance proceeds from CEO's death Interest income on tax-exempt bonds Rental income 200,000 (200,000) P 0,000(40,000)P 25,000 (10,000) O PO 30,0000 TOI$ 45,000 $ 1,745,000 Gross income $1,965,000 Expenses (45,000) (42,000) (25,000) (30,000) T (21,000) (500,000) (633,000) 5,000P 42.000 Interest paid to obtain tax-exempt bonds Net capital loss Depreciation Life insurance premiums Federal income tax expense Total expenses before charitable contribution, NOL, and DRD Income before charitable contribution, NOL, and DRD NOL carryover from prior year Taxable income for charitable contribution limitation purposes Charitable contributions 5,000 21.000 500,000 P 5,000 $ 1 ,332,000 S 1,740,000 (180,000) 1,152,000 S $ 1,740,000 2,000T(168,000) $ 1,572,000 Book/Taxable income 280,000 650,000 Complete this question by entering your answ Req A and B Reqc Req D Compute Timpanogos Inc.'s tax liability for 2018. Tax liability S 329,250
