Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2022, it reported financial statement income after taxes of $1,342,000. Timpanogos provided the following information relating to its 2022 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 $40,000

Interest paid on loan obtained to purchase tax-exempt bonds $45,000

Rental income payments received and earned in 2022 $15,000

Rental income payments received in 2021 but earned in 2022 $10,000

Rental income payments received in 2022 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 2022 $310,000

Required:

a. 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.

b. Identify each book-tax difference as either permanent (P) or temporary (T).

c. Complete Schedule M-1 for Timpanogos.

d. Compute Timpanogos Incorporated's tax liability.