your tax practice assignment involves a review of your client's financial information and tax situations before preparing tax returns (pre-tax filing advisory). Review the client's business and financial information from Comprehensive Tax Return Problem 64.

64. Timpanogos Inc. is an accrual-method, calendar-year corporation. For 2020, it reported financial statement income after taxes of $1,342,000. Timpanogos provided the following information relating to its 2020 activities:

Life insurance proceeds as a result of CEO's 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 2020

15,000

Rental income payments received in 2019 but earned in 2020

10,000

Rental income payments received in 2020 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 2020

310,000

Requirement

prepare the tax returns and the notes to the returns prepared by you