Reference no: EM133080188
Question - Timpangos Inc is an accrual- method calender 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
Required -
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.
Identify each book-tax difference as either permanent or temporary.
Complete Schedule M-1 for Timpanogos.
Compute Timpanogos Inc.'s tax liability for 2020.
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