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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:

  1. 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.
  2. Identify each book-tax difference as either permanent (P) or temporary (T).
  3. Complete Schedule M-1 for Timpanogos.
  4. Compute Timpanogos Incorporated's tax liability.

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