Comprehensive Problem 16-57 (LO 16-1, LO 16-2, LO 16-3) Timpanogos Inc. is an accrual-method calendar-year corporation....

 

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Comprehensive Problem 16-57 (LO 16-1, LO 16-2, LO 16-3) Timpanogos Inc. is an accrual-method calendar-year corporation. For 2018, it reported financial statement income after taxes of $1,152,000. Timpanogos provided the following information relating to its 2018 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. Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds issued in 2018 Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2019. Rental income payments received in 2018 but earned in 2019 Rental income payments received in 2019 but not earned by year-end Tax depreciation Book Depreciation Net capital loss. Federal income tax expense for books in 2019 Required: $ 200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000 55,000 25,000 42,000 500,000 a. 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. b. Identify each book-tax difference as either permanent (P) or temporary (T). c. Complete Schedule M-1 for Timpanogos. d. Compute Timpanogos Inc.'s tax liability for 2019. Comprehensive Problem 16-57 (LO 16-1, LO 16-2, LO 16-3) Timpanogos Inc. is an accrual-method calendar-year corporation. For 2018, it reported financial statement income after taxes of $1,152,000. Timpanogos provided the following information relating to its 2018 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. Charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds issued in 2018 Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2019. Rental income payments received in 2018 but earned in 2019 Rental income payments received in 2019 but not earned by year-end Tax depreciation Book Depreciation Net capital loss. Federal income tax expense for books in 2019 Required: $ 200,000 2,000,000 21,000 180,000 300,000 40,000 45,000 15,000 10,000 30,000 55,000 25,000 42,000 500,000 a. 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. b. Identify each book-tax difference as either permanent (P) or temporary (T). c. Complete Schedule M-1 for Timpanogos. d. Compute Timpanogos Inc.'s tax liability for 2019.

Answer rating: 100% (QA)

a b T reflects temporary booktax differ... View the full answer