Research and Development (R&D) Costs

question 30

Multiple Choice

Research and development (R&D) costs:

• A) Generally pertain to activities that occur prior to the start of production.
• B) May be expensed or capitalized, at the option of the reporting entity.
• C) Must be capitalized and amortized.
• D) None of these answer choices are correct.

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Definitions:

LLC's

Stands for Limited Liability Companies, a business structure in the U.S. that offers personal liability protection to its owners but can be taxed as a partnership.

S Corporations

A special designation of corporation that allows income to be taxed only at the shareholder level, avoiding double taxation.

Flow-Through Entities

Entities through which income flows to the owners or investors, avoiding corporate income tax.

Schedule E

A tax form used to report income and losses from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.