Husband/Wife Joint Venture in AZ Community State?

[AZ-Tax]

Have Husband/Wife created 2-member LLC for Bus. Wife requested EIN and she answered the questions for which the IRS stated her Bus needs to file form 1065. The Bus will have employees. Since 2014 will be the first year for this Bus to file a tax return, is the Husband/Wife mandated to file form 1065 or can the Husband/Wife elect joint venture by both filing a Sch C?

[Lion]

An LLC cannot be a QJV; it's an LLC. It's a multi-member LLC and cannot be a disregarded entity for tax purposes; only a single-member LLC defaults to a disregarded entity. Your two-member LLC defaults to a partnership. Only two individuals, husband & wife, can be a QJV, a disregarded entity for tax purposes. Your husband & wife clients already formed an LLC at the state level to be taxed as a partnership or to elect corporate taxation.

[Gary2]

An LLC cannot be a QJV; it's an LLC. It's a multi-member LLC and cannot be a disregarded entity for tax purposes; only a single-member LLC defaults to a disregarded entity. Your two-member LLC defaults to a partnership. Only two individuals, husband & wife, can be a QJV, a disregarded entity for tax purposes. Your husband & wife clients already formed an LLC at the state level to be taxed as a partnership or to elect corporate taxation.

That's not true for community property states. See http://www.irs.gov/Businesses/Small-...lity-Companies, and scroll down to the heading "Joint Ownership of LLC by Spouse in Community Property States".

[Lion]

Oh, yeah, that was in the title and everything! Sleep-deprived. And, seldom have community property issues with my clients. I think the whole H/W reporting in community property states helped push the QJV thing now available to all. But, as you say, that doesn't change the community rules. Sorry. What Gary said.