Lovely Cosmetics Inc

Lovely Cosmetics Inc. incurred $785,000 research costs on the development of its formula for a new line of face creams. Lovely obtained a 17-year patent on the formula from the U.S. government. Which of the following statements is true?

A) Lovely is allowed to deduct the $785,000 research costs.
B) Lovely's tax basis in its patent is $785,000.
C) The $785,000 cost results in a favorable book/tax difference.
D) Both Lovely is allowed to deduct the $785,000 research costs and Lovely's tax basis in its patent is $785,000 are true.