Stan and Susan, two calendar year taxpayers, are starting a new business to manufacture and sell digital circuits. They intend to incorporate the business with $600,000 of their own capital and $2 million of equity capital from investors. The company expects to incur organizational and start-up expenditures of $100,000 in the first year. Inventories are a material income-producing factor. The company also expects to incur losses of $500,000 in the first two years of operations and substantial research and development expenditures in the first three years. The company expects to break even in the third year and be profitable in the fourth year. Identify and describe the accounting methods and tax elections that Stan and Susan must consider in their first year of operations. For each method and election identified, provide possible alternatives and include both advantages and disadvantages for each alternative. Explain your reasons.