Filing a Qualified Joint Venture Tax Return
The Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) signed on May 25, 2007, created a Qualified Joint Venture. This is a trade or business operated solely by a husband and wife where both materially participate, and both ELECT to treat the income as outlined here.
A qualified joint venture is not to be treated as a partnership, all income is divided between the spouses in accordance with their interests in the venture, and each spouse reports his/her respective share as if it was a sole proprietorship including paying self-employment taxes on such profit.
The instructions for Schedule C includes a brief discussion of a qualified joint venture. These instructions may be enlightening for some. For example, they refer to two Schedule Cs, not one as some tax software programs have previously allowed.
The wording says:
“Husband-wife business. If you and your spouse jointly own and operate a business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Do not use Schedule C or C-EZ. Instead, file Form 1065. See Pub. 541 for more details.
Exception – Qualified joint venture. If you and your spouse materially participate (see Material participation beginning on page C-2_ as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be taxed as a qualified joint venture instead of a partnership. To make this election, you must divide all items of income, gain, loss, deduction, and credit between you and your spouse in accordance with your respective interests in the venture. Each of you must file a separate Schedule C or C-EZ. On each line of your separated Schedule C or C-EZ, you must enter your share of the applicable income, deduction, or loss.
As long as you remain qualified, your election cannot be revoked without IRS consent.”
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DVDs CURRENTLY AVAILABLE – We have developed several DVDs on various tax topics. Below is our current list with more expected to be developed. Each DVD (other than the Ethics) is approximately 100 minutes in length and qualifies for 2 CPEs upon completion of the CPE exam with at least 70% accuracy. The Ethics programs are approximately 50 minutes each and qualify for 1 CPE upon completion of the CPE exam with at least 70% accuracy. The text can be sent with the DVD as either paper or as a pdf copy. If you are interested, please contact our office for an order form or more information. Topics available include AMT, Death, Ethics, Form 1041, Form 4797, NOL, Recent Laws & Developments, and more.