Timpanogos Inc. is an accrual-method calendar-year corporation. For 2023, it reported financial statement income after taxes of $1,342,000. Timpanogos provided the following information relating to its activities for the year:

Required:

1. Reconcile book income to taxable income for Timpanogos Inc. 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 or temporary.
3. Complete Schedule M-1 for Timpanogos.
4. Compute Timpanogos Inc.’s tax liability.

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Life insurance proceeds as a result of CEO's death Revenue from sales (for book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Charitable contributions Cost of goods sold for book purposes and tax Interest income on tax-exempt municipal bonds Interest paid on loan obtained to purchase tax-exempt municipal bonds Rental income payments received and earned in 2023 Rental income payments received in 2022 but earned in 2023 Rental income payments received in 2023 but not earned by year end $200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000