Husband & Wife Business

[Absolut]

I have new clients, who weren't married last year, but are this year. They have a dance studio to give dancing lessons and also compete in dancing competitions. Do I need to report this on a 1065 as a partnership? They also have a house in which they rent part of it out, I can just report this under a schedule E or does this involve another 1065?
They actually have 4 businesses, he bakes Cakes - which is his alone, they give dancing instructions together, then they do the competitions for dancing, and they have the Rental. Any suggestions would be welcome.

[Unregistered]

what state?

in a non-community property state a business that is actively carried on by a husband and wife is a partnership, independent of a formal agreement, and needs to be reported on 1065. Did they get an EIN for the "partnership" activities, and if so what entity type did they indicate on the application.

The rental would go on 1040, Schedule E, I think, provided they file a joint return. If filing MFS you would most likely need a 1065 for that activity also.

Sounds like this could get expensive for them, hope they are prepared for it. I always hate to present an invoice to a client when they assume one fee and we charge much more. But, that is the cost of doing business!

[skhyatt]

Community Prop State

In a comm. prop. state, I believe a couple can file as if a sole prop. on sch C. Sch E for the rental. If not comm. prop. state, then it's as the previous poster stated.

[Absolut]

Husband & Wife Business

They are living in Maine. I told them before I started that they might end up with a couple of schedule C's and schedule E, so they're prepared for that. They are filing jointly. I understand now why the business would be filed on a 1065, after I did some reading to make sure. Thanks for the come back. Sorry I meant Sch E.

[Unregistered]

Schedule S?

My brain may be fried, but that one doesn't ring a bell.

[Bees Knees]

Schedule SE, not Schedule S.

Speaking of H&W businesses, you might want to check out the following link before your go filing that 1065:

http://www.thetaxbook.com/forums/showthread.php?t=35