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Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,503,040. Timpanogos provided the following information relating to
Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,503,040. Timpanogos provided the following information relating to its 2021 activities:
Life insurance proceeds as a result of CEOs death | $ 224,000 |
---|---|
Revenue from sales (for both book and tax purposes) | 2,240,000 |
Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. | 23,520 |
Qualified charitable contributions | 201,600 |
Cost of goods sold for book and tax purposes | 336,000 |
Interest income on tax-exempt bonds | 44,800 |
Interest paid on loan obtained to purchase tax-exempt bonds | 50,400 |
Rental income payments received and earned in 2021 | 16,800 |
Rental income payments received in 2020 but earned in 2021 | 11,200 |
Rental income payments received in 2021 but not earned by year-end | 33,600 |
Tax depreciation | 61,600 |
Book Depreciation | 28,000 |
Net capital loss | 47,040 |
Federal income tax expense for books in 2021 | 347,200 |
Required:
- Reconcile book income to taxable income for Timpanogos Incorporated. Be sure to start with book income and identify all of the adjustments necessary to arrive at taxable income.
- Identify each book-tax difference as either permanent (P) or temporary (T).
- Complete Schedule M-1 for Timpanogos.
- Compute Timpanogos Incorporateds tax liability for 2021.
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