Mann Inc. 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:

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According to accounting standards, the cost incurred in negotiating and arranging a lease should be capitalized and amortized over the lease term. Since the lease term in this case is 36 months, the $7,250 cost should be capitalized and amortized over 36 months. Option C is incorrect as depreciation is not applicable to intangible assets such as lease negotiation costs. Option A is incorrect as intangible assets can be amortized over their useful life, and lease negotiation costs have a defined useful life in the form of the lease term. Option D is incorrect since the cost cannot be deducted in the year of payment, but rather should be capitalized and amortized over the lease term.

Mann Inc Paid $7,250 to a Leasing Agent to Negotiate Mann's