I said I'd try to get a cite for this question (why a mom & pop LLC can't
elect to be a Qualified Joint Venture) from earlier this week. I spent the
last two days at GearUp in OKC, and had a chance to ask an instructor
(Michael Gordon) for a cite. He said that GearUp's position comes, not from
the actual Code language of Sec 761(f), but from language contained in the
Small Business Work Opportunity Act of 2007, which has not yet been
integrated into the Code. But he didn't have a copy of the Act, and I can't
find any such language in the text of the Act, but only in the IRS
instructions for making the QJV election.
Sec 761(f) says....
*******************
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.
***************
I don't think anything there precludes an LLC from making a QJV election.
The other interesting observation from the GearUp instructor was that, in
his opinion, the entire QJV code section 763(f) is redundant and basically
nuts. He said that any husband - wife partnership has always had this
option available to them statutorily, though he did not give me a cite for
that opinion.
Chuck Warman, CPA
Wichita Falls, TX
-------------------------------
-----Original Message-----
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of
Chuck Warman
Sent: Tuesday, October 28, 2008 3:20 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
Thanks, John, but I don't understand this part of the GearUp quote:
"Therefore, a business owned and operated by the spouses through a Limited
Liability Company, general partnership, or limited partnership does not
qualify for the election."
What other kinds of joint ventures are there? It seems to me to be saying
that NO h/w partnership of any kind can make the election. But that would
seem to directly contradict the Code language.
I'm heading to a GearUp seminar tonight. I'll ask tomorrow.
Thanks,
Chuck
*************************
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of
John Stevens, Equi-Tax
Sent: Tuesday, October 28, 2008 3:09 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
Chuck,
Here's from the latest Gear Up manual on entities. It's not authority but
indicates where the IRS is heading re whether an H/W LLC can file 2 Schedule
C's:
"NEW DEVELOPMENT: While the IRS has yet to issue formal guidance on this
change, information on its website reveals that the IRS' position is that
the escape from partnership treatment for spousal business is limited in
scope. It does not apply to spouses who operate in the name of a state law
entity. The election can be made only for a business operated by spouses as
co-owners that is, or should otherwise be, taxed informally (my emphasis) as
a partnership. Therefore, a business owned and operated by the spouses
through a Limited Liability Company, general partnership, or limited
partnership does not qualify for the election."
Based on that it appears that IRS is taking the position that H/W LLC's can
elect 2 Schedule C's. Maybe we won't know for sure until after IRS issues
formal guidance and someone challenges it.
John Stevens, EA
Stevens Tax & Accounting, Inc., dba Equi-Tax
1870 - 50th St. E., Suite 8
Inver Grove Heights, MN 55077
651-773-5000
FAX 651-457-4529
equitax@unique-software.com
www.equitax.net
________________________________________
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of
Chuck Warman
Sent: 10/28/2008 2:28 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
I still can't find where it says that in Sec 761, where qualified joint
ventures are defined.
Chuck
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of
Donna J. Perrone
Sent: Tuesday, October 28, 2008 2:14 PM
To: taxchat@yahoogroups.com
Subject: RE: [taxchat] Husband-Wife LLC & OIH
Lynne,
Federal law says you can't do it.....
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.
________________________________________
From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of
Lynne Ayton
Sent: Tuesday, October 28, 2008 2:53 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] Husband-Wife LLC & OIH
drake allows you to put J on a sched c, & the 8829 automatically goes to the
sched c also, but will create 1 SE's for each spouse. WI doesnt say it
"wont" allow h/w llc's, so my guess is, you can file a joint sched C if
state law allows it.
lynne
Mel Wolfson wrote:
I believe that an LLC can not elect to be treated as two Schedule Cs.
------------------------------------
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.
Yahoo! Groups Links
------------------------------------
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.
Yahoo! Groups Links
<*> To visit your group on the web, go to:
http://groups.yahoo.com/group/taxchat/
<*> Your email settings:
Individual Email | Traditional
<*> To change settings online go to:
http://groups.yahoo.com/group/taxchat/join
(Yahoo! ID required)
<*> To change settings via email:
mailto:taxchat-digest@yahoogroups.com
mailto:taxchat-fullfeatured@yahoogroups.com
<*> To unsubscribe from this group, send an email to:
taxchat-unsubscribe@yahoogroups.com
<*> Your use of Yahoo! Groups is subject to:
http://docs.yahoo.com/info/terms/
