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Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2022, it reported financial statement income after taxes of $1,396,200. Timpanogos provided the following information relating to
Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2022, it reported financial statement income after taxes of $1,396,200. Timpanogos provided the following information relating to its 2022 activities:
Life insurance proceeds as a result of CEO's death | $ 208,000 |
---|---|
Revenue from sales (for both book and tax purposes) | 2,080,000 |
Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. | 21,800 |
Charitable contributions | 187,200 |
Cost of goods sold for book and tax purposes | 312,000 |
Interest income on tax-exempt bonds | 41,600 |
Interest paid on loan obtained to purchase tax-exempt bonds | 46,800 |
Rental income payments received and earned in 2022 | 15,800 |
Rental income payments received in 2021 but earned in 2022 | 10,400 |
Rental income payments received in 2022 but not earned by year-end | 31,200 |
Tax depreciation | 57,000 |
Book Depreciation | 25,800 |
Net capital loss | 43,600 |
Federal income tax expense for books in 2022 | 322,400 |
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 Incorporated's tax liability.
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