Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,529.880. Timpanogos provided the following information relating to its 2021 activities: Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Qualified charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2021 Rental income payments received in 2020 but earned in 2021 Rental income payments received in 2021 but not earned by yoar-end Tax depreciation Book Depreciation Net capital loss Federal income tax expense for books in 2021 $ 228,000 2,280,000 23,940 205,200 342,000 45,600 51,300 17,100 11,400 34,200 62,700 28,500 47,880 353,400 Required: a. 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. b. Identify each book-tax difference as either permanent (P) or temporary (T). c. Complete Schedule M-1 for Timpanogos. d. Compute Timpanogos Incorporated's tax liability for 2021.
Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,529.880. Timpanogos provided the following information relating to its 2021 activities: Life insurance proceeds as a result of CEO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Qualified charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2021 Rental income payments received in 2020 but earned in 2021 Rental income payments received in 2021 but not earned by yoar-end Tax depreciation Book Depreciation Net capital loss Federal income tax expense for books in 2021 $ 228,000 2,280,000 23,940 205,200 342,000 45,600 51,300 17,100 11,400 34,200 62,700 28,500 47,880 353,400 Required: a. 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. b. Identify each book-tax difference as either permanent (P) or temporary (T). c. Complete Schedule M-1 for Timpanogos. d. Compute Timpanogos Incorporated's tax liability for 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes
of $1,529,880. Timpanogos provided the following information relating to its 2021 activities:
$ 228,000
2,280,000
23,940
205,200
Life insurance proceeds as a result of CrO's death
Revenue from sales (for both book and tax purposes)
Premiums paid on the key-person life insurance policies. The policies have no cash surrender value.
Qualified charitable contributions
Cost of goods sold for book and tax purposes
Interest income on tax-exempt bonds
Interest paid on loan obtained to purchase tax-exempt bonds
Rental income payments received and earned in 2021
Rental income payments received in 2020 but earned in 2021
Rental income payments received in 2021 but not earned by year-end
Tax depreciation
Book Depreciation
Net capita1 loss
Federal income tax expense for books in 2021
342,000
45,600
51,300
17,100
11,400
34,200
62,700
28,500
47,880
353,400
Required:
a. 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.
b. Identify each book-tax difference as either permanent (P) or temporary (T).
c. Complete Schedule M-1 for Timpanogos.
d. Compute Timpanogos Incorporated's tax liability for 2021.
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For Chairtable contributions: the company contributed $205,200. How do you calculate the $12,540?
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