Pine Corp.?s books showed pretax income of $800,000 for
the year ended December 31, year 1. In the computation of federal
income taxes, the following data were considered:

Gain on an involuntary conversion $350,000

(Pine has elected to replace the property within
the statutory period using total proceeds.)
Depreciation deducted for the tax purposes in

excess of depreciation deducted for book purposes 50,000

Federal estimated tax payments, year 1 70,000

Enacted federal tax rates, year 1 30%

What amount should Pine report as its current federal income tax
liability on its December 31, year 1 balance sheet?

$ 50,000
$ 65,000
$120,000
$135,000

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