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Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,409,100. 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 $1,409,100. Timpanogos provided the following information relating to its 2021 activities:
Life insurance proceeds as a result of CEOs death | $ 210,000 |
---|---|
Revenue from sales (for both book and tax purposes) | 2,100,000 |
Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. | 22,050 |
Qualified charitable contributions | 189,000 |
Cost of goods sold for book and tax purposes | 315,000 |
Interest income on tax-exempt bonds | 42,000 |
Interest paid on loan obtained to purchase tax-exempt bonds | 47,250 |
Rental income payments received and earned in 2021 | 15,750 |
Rental income payments received in 2020 but earned in 2021 | 10,500 |
Rental income payments received in 2021 but not earned by year-end | 31,500 |
Tax depreciation | 57,750 |
Book Depreciation | 26,250 |
Net capital loss | 44,100 |
Federal income tax expense for books in 2021 | 325,500 |
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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