Business Co-Owned by a Married Couple
A business co-owned by a married couple who file a joint return may elect to be taxed as a qualified joint venture instead of a partnership for federal income tax purposes.
A qualified joint venture is a joint venture involving the conduct of a trade or business if:
· the only members of the joint venture are a married couple,
· both spouses materially participate in the trade or business, and
· both spouses elect to have the provision apply.
All items of income, gain, loss, deduction, and credit from a qualified joint venture are divided between the spouses in accordance with their respective interests in the venture.
Each spouse takes into account his or her respective share of these items as a sole proprietor.
Each spouse should account for his or her respective share on a separate Schedule C or Schedule F Form 1040.
Each spouse may also need to file a separate Schedule SE for self-employment tax.
Each spouse elects to have the provision apply by filing a separate Schedule C or F, and a separate Schedule SE.
Each spouse may also need to pay quarterly estimated federal income tax payments for self-employment tax using Form 1040-ES.
This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
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