Question

oogle Driv. 6 1. All politicians in... G Which of the follo "rom the informati... BryteWave: Organ... LHROB101 Mgmtc.... Incorrect Question 10 0/0.2 pts Realizing that bacon toothpaste probably wasn't the best invention, Mr. Bacon's business (Bacon Co.) developed a new product bacon scented sunscreen. Bacon Co. spent 6 months (January 2019 - Sept. 2019) and $100,000 developing the sunscreen. The product launched October 1, 2019, and initially it was a huge success. Bacon-scented sunscreen generated over $600,000 in sales in 2019. Sales tapered off quickly, and the sunscreen only generated sales of $10,000 in 2020. It is anticipated that there will be no bacon-scented sunscreen sales after 2020.

Answer 1

Given
Particulars	Amount
R&E expense	$100,000
revenue2019	$600,000
revenue2020	$10,000
In the year 2019
Bacon Co. opts to amortize expenditures over a period of not less than 60 months
Therefore, $5000($100000/60*3) can be amortized for the period 2019

NOTE:

For amounts paid or incurred in a tax year beginning after December 31, 2021, the law will require taxpayers to capitalize and amortize IRC Section 174 research and experimental (R&E) expenditures over a five year period, beginning with the midpoint of the taxable year in which the expenditure is paid or incurred. Costs for research conducted outside of the U.S. will be amortized over a 15-year period. Further, expenditures for the development of any software will be treated as R&E expenditures. For purposes of this rule, software development costs are included in the definition of R&E expenditures.

Under current law, Section 174 generally allows taxpayers to deduct R&E expenditures as the amounts are paid or incurred during a tax year; alternatively, taxpayers may elect to capitalize and amortize these expenditures over a period of no less than 60 months