Bangor Company incurred $70,000 of research costs in year 1.In May of year 2, it began to sell the products developed through this research.Which of the following is correct regarding these expenditures?

Question

Quizplus · Accepted Answer

Under IRS rules, research and experimental expenditures can be amortized over 60 months starting from the month the taxpayer first realizes benefits from the research. Since Bangor began selling the products in May of year 2, it can start amortizing the $70,000 over 60 months, resulting in a deduction of $9,333 in year 2.

Bangor Company Incurred $70,000 of Research Costs in Year 1