K-1

[Bonnie]

Is there a way to determine whether to issue one K-1 or two for a married couple. We get one from a S Corp we are a part of and we get one with both my husband and my name on. I am doing a return for a married couple who basically own the business and are the only investors. I am trying to decide if I issue one jointly or issue two??

Thanks
Bonnie

[Luis Mopeo]

Is there a way to determine whether to issue one K-1 or two for a married couple. We get one from a S Corp we are a part of and we get one with both my husband and my name on. I am doing a return for a married couple who basically own the business and are the only investors. I am trying to decide if I issue one jointly or issue two??

Thanks
Bonnie

Issue two K-1's.

For one thing, it's not up to the issuer of a K-1 to dictate how the recipient must file his or her return. If you issue just one K-1, you're assuming the recipients will file MFJ. That's not a valid assumption.

Also, these things can and do fall apart with some degree of regularity. Avoid the mess in case the marital bliss evaporates at some point. Filing only one K-1 is making the dangerous assumption that all will be happy in with husband and wife now and forever.

[JoshinNC]

It depends on who owns the shares,

Is there a way to determine whether to issue one K-1 or two for a married couple. We get one from a S Corp we are a part of and we get one with both my husband and my name on. I am doing a return for a married couple who basically own the business and are the only investors. I am trying to decide if I issue one jointly or issue two??

Thanks
Bonnie

If both the husband and wife own shares individually (they have share certficates to prove this, along with it being recorded in the corp minutes) than you have to issue a K-1 to each respective shareholder, regardless of their status of being married to another shareholder. There are many reasons for this, the least of which being if they wanted to exercise the option of filing seperate returns.

However, in the IRS's eyes married shareholders of an S-Corp are considered one shareholder and their shares are aggregated for purposes of determining whether the business is closely held or there exists a brother-sister or parent-subsidiary relationship.

[JoshinNC]

You beat me to the punch!

Issue two K-1's.

For one thing, it's not up to the issuer of a K-1 to dictate how the recipient must file his or her return. If you issue just one K-1, you're assuming the recipients will file MFJ. That's not a valid assumption.

Also, these things can and do fall apart with some degree of regularity. Avoid the mess in case the marital bliss evaporates at some point. Filing only one K-1 is making the dangerous assumption that all will be happy in with husband and wife now and forever.

But I do agree.

Luis, you are a great addition to our board and I appreciate your sometimes candid responses.