Mann Incorporated paid $7,250 to a leasing agent to negotiate Mann's 36-month lease for 18,000 square feet of space in a new commercial building. For tax purposes, Mann must:

Multiple Choice

• Capitalize the $7,250 cost as a nonamortizable intangible asset.

• Capitalize the $7,250 cost and amortize it over 36 months.

• Capitalize the $7,250 cost and depreciate it as 5-year recovery property.

• Deduct the $7,250 cost in the year of payment.