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’s 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 Don't use plagiarized sources. Get Your Custom Essay on finch inc a calendar year general contractor and cardinal inc a development corporat 699205 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! | $ 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?
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