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Partnership to Schedule C

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    #1

    Partnership to Schedule C

    I have a client that has an LLC and has been filing as a Partnership with his wife. He would like to change to two schedule Cs. Can he just do this, or does he need to notify the IRS of the change.
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    #2
    A husband-wife LLC

    Can't file two Sch. C's. It does not qualify as a QJV.

    Comment

      #3
      Election for married couples unincorporated businesses | Internal Revenue Service
      http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Election-for-Husband-and-Wife-Unincorporated-Businesses
      For tax years beginning after December 31, 2006, the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28) provides that a "qualified joint venture", whose only members are a married couple filing a joint return, can elect not to be treated as a partnership for Federal tax purposes.


      Unfortunately they can not simply convert from a LLC to qualified joint venture.

      They would need to dissolve that LLC (partnership taxed) and then transfer the assets to the new QJV that they form.

      The old EIN can not be transferred so if they need a EIN they will have to apply.
      Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

      Comment

        #4
        Originally posted by ATSMAN View Post
        [url]They would need to dissolve that LLC (partnership taxed) and then transfer the assets to the new QJV that they form.
        In doing so, they would lose the liability protections associated with the LLC structure and become two sole proprietors, correct?
        --
        James C. Samans ("Jamie")

        Comment

          #5
          If they live in a community property state, an LLC can report on two Schedule C's as a "Qualified Joint Venture".

          However, Revenue Procedure 2002-69 Section 4.02 states: "A change in reporting position will be treated for federal tax purposes as a conversion of the entity."

          http://www.irs.gov/pub/irs-drop/rp-02-69.pdf




          However, I'm not entirely sure what that means.

          Comment

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