Skylark, lnc., a calendar year construction company, and Teal, Inc., a development corporation with a March 31

Question:

Skylark, lnc., a calendar year construction company, and Teal, Inc., a development with a March 31 year-end, form the equal ST LLC on January 1 of the current year. Both members are C corporations. The LLC is formed to construct and lease shopping centers. Skylark contributes equipment (basis and fair market value of $800,000) and cash of $1.2 million. Teal contributes land (basis of $300,000, fair market value of $600,000) and cash of $1.4 million. The cash is used as follows:
• Legal fees for drafting LLC's operating agreement ..................... $ 10,000
• Office expense (utilities, rent, overhead, etc.) .............................. 90,000
• Materials and labor for construction of shopping center ............... 2,500,000
What issues must ST LLC address in preparing its initial tax return?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...