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 CEOs death	$	200,000
Revenue from sales (for both book and tax purposes)		2,000,000
Premiums paid on the key-person life insurance policies. The policies have no cash surrender value.		21,000
Charitable contributions		180,000
Cost of goods sold for book and tax purposes		300,000
Interest income on tax-exempt bonds issued in 2018		40,000
Interest paid on loan obtained to purchase tax-exempt bonds		45,000
Rental income payments received and earned in 2019		15,000
Rental income payments received in 2018 but earned in 2019		10,000
Rental income payments received in 2019 but not earned by year-end		30,000
Tax depreciation		55,000
Book Depreciation		25,000
Net capital loss		42,000
Federal income tax expense for books in 2019		500,000

Required:

1. 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.
2. Identify each book-tax difference as either permanent (P) or temporary (T).
3. Complete Schedule M-1 for Timpanogos.
4. Compute Timpanogos Inc.s tax liability for 2019.

Requirement A & B

Requirement C

Requirement D

PLEASE HELP I HAVE TRIED MY BEST AND CAN NOT FIGURE OUT. THIS IS UNDER THE MOST RECENT TAX PROVISIONS AS OF 09/11/2109

Description Book Income (Dr) or $ 2,000,000 (300,000) Book-tax adjustments (Dr) ar $ Taxable Income (Dr) Cr 2,000,000 (310,000) 1,690,000 (60,000) XT X 50,000 XT $ 1,700,000 $ Revenue from sales Cost of goods sold Gross profit Other income: Life insurance proceeds from CEO's death Interest income on tax-exempt bonds Rental income 200,000 40,000 25,000 $ 1,965,000 200,000 XP (40,000) P (10,000) T 3 0,000T $ $ 45,000 1,735,000 45,000 45,000 P T (30,000) T (55,000) Gross income Expenses: 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 (45,000) (45,000) (25,000) (21,000) (500,000) (636,000) $ 1,329,000 21,000 500,000 P P (55,000) 1,680,000 $ 0 $ 12,000 T O (180,000) $1,149,000 1,680,000 (168,000) 1,512,000 Book/Taxable income $ 60,000 703,000 $ $ 1,259,000 500,000 45,000 X 20,000 Schedule M-1: Reconciliation of Income (Loss) per Books With Income per Return Net income (loss) per books 2. Federal income tax per books Excess of capital losses over capital gains Income subject to tax not recorded on books this year (itemize): Rental income Expenses recorded on books this year not deducted on this return (itemize): a. Depreciation b. Charitable contributions c. Travel and entertainment Interest paid to obtain tax-exempt bonds Life insurance premiums Total 0 12,000 X 21,000 1,857,000 $ 40,000 200,000 45,000 X Income recorded on books this year not included on this return (itemize): Tax-exempt interest Life insurance proceeds from CEO's death Rental income Deductions on this return not charged against book income this year (itemize): a. Depreciation b. Charitable contributions Sec. 263A costs Total 30,000 0 10,000 > $ 325,000 $ 1,532,000 Income Req A and B Reqc Reg D Compute Timpanogos Inc.'s tax liability for 2018. Tax liability $ 325,000 $ 1,532,000 Income Req A and B Reqc Reg D Compute Timpanogos Inc.'s tax liability for 2018. Tax liability