Wallace Corporation, a calendar year accrual method taxpayer, enters into a 5 year agreement on July 1, X1 with EZ Software for the use of a database. The agreement obligates Wallace to pay EZ a base fee of $50,000 at the beginning of the agreement year and an additional charge of $0.50 per database access 30 days after the end of each agreement year. The database is accessed 50,000 times during the first agreement year: 20,000 times in X1 and 30,000 times from January 1, X2 to June 30, X2. Wallace pays the $50,000 base fee to EZ on July 1, X1 and the $25,000 access use payment on July 30, X2. The amount of liability deductible by Wallace for the X1 taxable year is:

Select one:

a.$5,000 base fee and $10,000 access fees

b.$50,000 base fee and $25,000 access fees

c.$5,000 base fee ad $25,000 access fees

d.$50,000 base fee and $10,000 access fees