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?