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

This Answer is Correct (Answer is A, $50,000)

The current federal income tax liability is based on taxable income, which is computed in the "book to tax reconciliation" below.

Accounting income	$ 800,000
Nontaxable gain	(350,000)
Excess tax depreciation	(50,000)
Taxable income	$ 400,000

The gain on involuntary conversion was included in accounting income but is deferred for tax purposes. Depreciation deducted for tax purposes in excess of book depreciation also causes taxable income to be less than accounting income. Taxes payable before considering estimated tax payments is $120,000 ($400,000 30%). Since tax payments of $70,000 have already been made, the 12/31/Y1 current federal income tax liability is $50,000 ($120,000 $70,000).

QUESTION:

Why is the gain on involuntary conversion deducted from accounting income instead of added to it since it's a gain? Also why is it included to compute the taxable income and why is $70,000 estimated tax payments used to compute the income tax liability? Please explain regardless of the explanation above.