Discussion:Getting past 263A

Real estate developer partners purchase land in FL with an LLC on which they'll build 234 condos. They need to spend about $1,000,000 in the next year, half for constructing a clubhouse and 1/2 for digging drainage ditches. Of course the client is concerned with having to capitalize everything and allocate over the condo inventory that has yet to be built, knowing these costs won't be recaptured for a significant amount of time. Client wants to know about setting up a separate LLC to hire the subcontractors to build the clubhouse and dig ditches under a contract with the first LLC, with the hopes these costs can be accelerated. I know there are provisions in 263A that there needs to be arms-length fees and about transferring costs to related parties, etc. Just wanted to hear someone elses take on this and ideas.