Question: Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2015. Blue had the following expenses in connection with the project:

                                                                          2015                2016

Salaries 500,000                                                   600,000

Materials                                                              90,000             70,000

Insurance                                                              8,000               11,000

Utilities                                                                  6,000               8,000

Cost of inspection of materials for quality control           7,000               6,000

Promotion expenses                                                 11,000             18,000

Advertising                                                                 0                20,000

Equipment depreciation                                             15,000             14,000

Cost of market survey                                                8,000               0

The new product will be introduced for sale beginning in July 2017. Determine the amount of the deduction for research and experimental expenditures for 2015, 2016, and 2017 if:

a. Blue Corporation elects to expense the research and experimental expenditures.

b. Blue Corporation elects to amortize the research and experimental expenditures over 60 months.