In 2016, Phoenix Corporation acquires a new research facility and hires several scientists to develop new products.

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In 2016, Phoenix Corporation acquires a new research facility and hires several scientists to develop new products. No new products are developed until 2017, although the following expenditures were incurred:
Laboratory materials ..................................................................$40,000
Research salaries ....................................................................... 80,000
Overhead attributable to the research facility ...................................... 30,000
R&E equipment placed into service (5-year MACRS recovery period) ......100,000
Total .................................................................................. $250,000
a. What are Phoenix Corporation's deductions for R&E expenditures in 2016 and 2017 if the expensing method is elected?
b. How would your answer to Part a change if the deferral and amortization method were elected and the amortization period were 60 months?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Federal Taxation 2017 Comprehensive

ISBN: 9780134421438

30th Edition

Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson

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