Thanks!
Donna
Donna J. Perrone, EA
East Haven, CT
203-469-4939
203-468-2038 fax
IRS Circular 230 Disclosure: Unless expressly stated otherwise, any tax advice contained herein, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.
-----Original Message-----
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Chuck Warman
Sent: Tuesday, October 28, 2008 4:25 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
Well, the NATP and GearUp gurus are obviously a lot closer to the "inside" than I am. But all those qualifications aren't in the code or regs, and seem to me to undermine the stated purpose of the Code section. Like I told John, I'll ask at tomorrow's GearUp seminar.
Chuck
-----Original Message-----
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Donna J. Perrone
Sent: Tuesday, October 28, 2008 3:14 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
Chuck,
I haven't found the cite in the regs yet, but here is an excerpt from NATP's 1040 Update class I attended last week:
HUSBAND AND WIFE JOINT VENTURES
In general, if a husband and wife jointly own and operate an unincorporated business and share in the profits and losses, they are partners in a partnership and must file Form 1065, U.S. Return of Partnership Income. However, there is an exception to this general rule for a qualified joint venture (QJV).
The Small Business and Work Opportunity Act of 2007 (Small Business
Act) added §761(f) for tax years beginning after 2006, which provides that a QJV is not treated as a partnership for federal tax purposes.
A husband and wife can elect to be treated as a QJV if all of the following requirements have been satisfied:
The only members of the joint venture are a husband and wife.
The husband and wife file a joint return.
Both spouses make the election.
The joint venture conducts a trade or business (mere joint ownership of property is not a trade or business).
The business is owned and operated by the spouses as co-owners and not in the name of an entity formed under state law (including LLCs, LPs, or general partnerships).
Both spouses materially participate in the trade or business under the passive loss rules without regard to the rule that treats participation by one spouse as participation by the other.
There is no formal election statement. A husband and wife make the election to be treated as a QJV by filing a joint return as follows:
All items of income, gain, loss, deduction, and credit are divided between the spouses according to their respective interests in the venture.
Each spouse takes into account his or her respective share of these items as if they were attributable to a trade or business conducted by the spouse as a sole proprietor.
Each spouse must file a separate Schedule C, C-EZ, or F, and report his or her share of the applicable income, deduction, or loss on each line.
Each spouse must also file a separate Schedule SE to pay selfemployment tax, if applicable.
Once made, the election can only be revoked with the permission of the IRS. However, the election only remains in effect for as long as they continue to meet the requirements for filing a QJV election. If they fail to meet the requirements for a year, a new election is necessary for any future year in which they meet the requirements to be treated as a QJV.
Donna J. Perrone, EA
East Haven, CT
203-469-4939
203-468-2038 fax
IRS Circular 230 Disclosure: Unless expressly stated otherwise, any tax advice contained herein, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.
-----Original Message-----
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Chuck Warman
Sent: Tuesday, October 28, 2008 3:22 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
I don't see anything in IRC 761(f) that precludes an LLC from electing to be a qualified joint venture> The code lists three requirements:
(2) QUALIFIED JOINT VENTURE- For purposes of paragraph (1), the term
"qualified joint venture" means any joint venture involving the conduct of
a trade or business if--
(A) the only members of such joint venture are a husband and wife,
(B) both spouses materially participate (within the meaning of
section 469(h) without regard to paragraph (5) thereof) in such trade
or business, and
(C) both spouses elect the application of this subsection.
Chuck Warman, CPA
Wichita Falls, TX
-------------------------------
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Donna J. Perrone
Sent: Monday, October 27, 2008 5:01 PM
To: taxchat@yahoogroups.com; 'TaxTalk Listserv Members'
Subject: [taxchat] Husband-Wife LLC & OIH
Husband and wife run a business together out of their home. Because they are an LLC, they can't be a qualified joint venture and file on Sch C. I will file a 1065 for 2008.
I think I know the answer to my question, but I would appreciate someone confirming my thoughts. How should they take credit for office in home expenses for the business? Should we just calculate what the appropriate amounts should be, and have them write a check out of the business to reimburse themselves? And when would be the best time to do this? Quarterly? And what about for the 4th quarter? If the payment is made in January (they are cash basis), that would be taken on next year's return.
Comments are appreciated.
Donna
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IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.
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