in MARCH OF YEAR 1, NEW AGE CORPORATION A CALENDAR YEAR TAXPAYER, BEGINS INCURRING THE FOLLOWING AMOUNTS DEVELOPING A NEW COMPUTER PROGRAM

SUPPLIES 12,500

SALARIES 15,000

UTILITIES 5,000

TOTAL 32,500

THE PROGRAM IS EXPECTED TO BE READY FOR SALE TO THE PUBLIC IN JUNE OF YEAR 2. IF NEW AGE ELECTS TO DEFER THESE EXPENSES AND USE THE OPTIONAL WRITE OFF METHOD, WHAT WILL THE ALLOWABLE DEDUCTION BE FOR EACH YEAR ENDED DECEMBER 31?

2708 IN YEAR 1 AND 3250 IN YEAR 2

0 IN YEAR 1 AND 1895 IN YEAR 2

0 IN YEAR 1 AND 3792 IN YEAR 2

32500 IN YEAR 2