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, building permits, and architectural designs created by Finch%u2019s employees.Cardinal contributed land 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?