In 2014, Phoenix Corporation acquires a new research facility and hires several scientists to develop new products. No new products are developed until 2015, 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 2014 and 2015 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?