Pharm Inc. is a small pharmaceutical company (organized four years ago) that is heavily involved in drug research. During the current year, Pharm Inc. incurred the following expenditures related to the company’s research efforts:
Salaries of research scientists and technicians ……………….. $180,000
Supplies and materials ……………………………………….. 162,000
Depreciation on research equipment …………………………. 30,000
For the previous four years, Pharm Inc. had average gross receipts of $5,000,000. The company’s fixed-base percentage is 3%. Compute Pharm Inc.’s current year credit for research activities. Is Pharm Inc. entitled to claim any deduction for research and experimentation expenses for the current year?