Timpanogos Inc. is an accrual-method calendar-year corporation. For 2017, it reported financial statement income after taxes of $1,149,000. Timpanogos provided the following information relating to its 2017 activities:

Life insurance proceeds as a result of CEO's death ...................................... $200,000

Revenue from sales (for 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

Interest income on private activity tax-exempt bonds issued in 2014............. 40,000

Interest paid on loan obtained to purchase tax-exempt bonds ....................... 45,000

Rental income payments received and earned in 2017 .................................... 15,000

Rental income payments received in 2016 but earned in 2017 ....................... 10,000

Rental income payments received in 2017 but not earned by year end ......... 30,000

MACRS depreciation ............................................................................................... 55,000

Book Depreciation .................................................................................................. 25,000

Alternative minimum tax depreciation................................................................. 50,000

Net capital loss ........................................................................................................ 42,000

Federal income tax expense for books in 2017................................................. 500,000

Timpanogos did not qualify for the domestic production activities deduction.

Required:

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 or temporary.

c. Complete Schedule M-1 for Timpanogos.

d. Compute Timpanogos, Inc.'s regular tax liability.

e. Determine Timpanogos's alternative minimum tax, if any.