**US TAXATION QUESTION

Three individuals recently formed Krypton Company as a limited liability company

(LLC). The three individualsJeff, Susan, and Richardown equal interests in the company,

and they all have substantial income from other sources. Krypton is a manufacturing

firm and expects to earn approximately $130,000 of ordinary income and $30,000 of

long term capital gain each year for the next several years. Jeff will be a full time manager

and will receive a salary of $60,000 each year. What tax issues should the owners consider

regarding the LLCs initial year of operations?