Finch inc a calendar year general contractor and cardinal

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Reference no: EM13583979

Finch, Inc., a calendar year general contractor, and Cardinal, Inc., a development corporation with a July 31 year-end, formed the equal FC, LLC, on January 1 of the current year. Both LLC members are C corporations. The LLC was formed to construct and lease shopping centers in Seattle, Washington. Finch contributed cash of $1 million, equipment (basis of $200,000, fair market value of $500,000), building permits, and architectural designs created by Finch%u2019s employees (basis of $0, fair market value of $200,000). Cardinal contributed land (basis of $500,000, fair market value of $700,000) and cash of $1 million. The cash was used as follows:

Legal fees for drafting LLC agreement $ 20,000
Materials and labor costs for construction in progress on shopping center 1,900,000
Office expenses (utilities, rent, overhead, etc.) 80,000
What issues must the LLC address in preparing its initial tax return?

Reference no: EM13583979

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