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    SE Taxes

    I believe somewhere in TTB Delux is mentions that rather than file a partnership return for a married couple in business, the IRS has not been complaining about one Schedule C, and spliting the the net income and each paying into SE.

    Any comments on this approach?
    Confucius say:
    He who sits on tack is better off.

    #2
    See thread from

    "Schedule C vs. 1065" from 1/12/06 one of Bees Knees posts has a link to another thread on the topic.
    http://www.viagrabelgiquefr.com/

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      #3
      Partnership-Sched. C

      In community property states this is sometimes done. One Sched. C & 2 Sched. SEs.

      Comment


        #4
        TTB, page 5-7 under the heading Schedule C or Partnership, there is a sub heading for Husband and wife business.

        Or if you want something more spicy, try this thread:

        Primary Forum for posting questions regarding tax issues. Message Board participants can then respond to your questions. You can also respond to questions posted by others. Please use the Contact Us link above for customer support questions.
        Last edited by Bees Knees; 01-18-2006, 01:33 PM.

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          #5
          SE Tax

          The instructions for a community property sched C do state that all the SE income should go on one SE for the one (primary) owner.

          We had a discussion some time ago and it appears that if you want to split the SE Income, then filing a partnership return with 2 K1 is a clearer route than a joint sched C.

          IRS may not be challenging this, but the instructions, while allowing a community property sched C, do not allow the splitting of the SE

          Comment


            #6
            Discussion was good before

            I am not in a community property state and I have two Schedule Cs recorded as joint, it automatically splits the SE 50/50 on Ultra Tax. The first one was a sister and husband of a good client who had gone through a BIG audit with substantial changes prior to my involvement. I left that one because of the large IRS file I reviewed. That was probably arount 1996. About 2001 or 2002 client did receive a letter from the IRS questioning why a partnership return was not filed in place of the Schedule C. I responded it has been done that way forever and audited without any suggestion for a change. The response was as I remember we will accept as previously filed (worded better). The second one is a husband and wife real estate team. They signed all contracts with the real estate company as joint-the 1099 comes out with both their names and even the retirement plan contributions are made and matched 50/50 to seperate accounts of each. Originally the husband did not appreciate my suggestion of 1065 and the 1099 was social security number anyway so a C with the in and out would have to been done. After his insistance I a joint Schdule C was filed with me telling him IRS correspondence will follow. That was 15 years ago, still a joint Schedule C and no correspondence. The first case there is probably no tax difference-in the second one I could get one of them over the FICA level with a different assignment of income.. The best plans do not always get done.

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              #7
              Sch.C or 1065

              I tend to agree with Abby, forgot the Pub number, but it say's that one Schedule C is OK for a husband and wife, BUT, say's nothing about spliting the SE. SOOOOO.......
              I had my client apply for a Partnership EIN number today. At least this approach will absolutely positively be correct, and no possibilty of penalty.

              Another approach to this problem was to change Sch. C every other year to spouse.

              The other way may be OK, but not "Aboslutely, Positively" OK. Yer right, I used to fly for FedEx.

              I would like to thank all for their thought and imput. May the waters be calm, and keep the wind at your back, nuthin better than downwind sailing.
              Last edited by RLymanC; 01-18-2006, 09:24 PM.
              Confucius say:
              He who sits on tack is better off.

              Comment


                #8
                I won't say it's the right way, but the firm I used to work at did it that way all the time. One Sch C & 2 SE's. I worked there for 8+ years and never heard a word from IRS that it should be done differently.

                Why burden a husband and wife with the extra cost of having a partnership tax return done so they can take 2 identical K1s to a jointly filed 1040. Once they file that 1040 return, they both become equally liable for any taxes incurred from either of those K1s.

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