New Photography Business Question

[ruthc]

A married couple started a photography business taking pictures at weddings, etc. They bought expensive cameras, computer, etc. I am not sure how to proceed with the return. Would each TP do their own Sch C and split the income/expenses? Or would a partnership have to be set up (of course was not done for 2014)? Any help is appreciated. Thanks

[Lion]

It can be a qualified joint venture or a partnership. What was their intent? Community property state?

[ruthc]

Qualified Joint Venture

Thanks a lot Lion. I checked the info on a "qualified joint venture" and that is exactly what they would fall under. The husband and wife are the only ones in the business. They do not reside in a community property state. Thanks a lot for leading me in the right direction! Knowing how they conducted other small businesses the husband had, I have a feeling this is a business that won't last for several years.
Thanks again for your help!

[Roland Slugg]

The QJV rules to which Lion refers are described on page 2 of the instructions for Schedule C under the heading "Business Owned and Operated by Spouses." Although this is a viable option, it does mean that there will be two Schedule Cs, each reporting that spouse's prorata share of every single item of income and expense, including depreciation (or §179) for each asset placed in service during the year. You might conclude that it is actually easier to just treat the business as a partnership and prepare a F-1065 ... which was always the case with H&W businesses until recently.

[ttbtaxes]

The results are different if the business they started was an LLC. Then they must file a partnership tax return.

[ruthc]

I will check it out

The QJV rules to which Lion refers are described on page 2 of the instructions for Schedule C under the heading "Business Owned and Operated by Spouses." Although this is a viable option, it does mean that there will be two Schedule Cs, each reporting that spouse's prorata share of every single item of income and expense, including depreciation (or §179) for each asset placed in service during the year. You might conclude that it is actually easier to just treat the business as a partnership and prepare a F-1065 ... which was always the case with H&W businesses until recently.

Thanks for that info. I will also check that out. I won't be working on the return right now, so I have time to make a good decision on which route to take.

[ttbtaxes]

One other option would be to have one spouse the owner of the business and the other spouse an employee.