Making the election. To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse by your respective interests in the venture. You must file a separate Schedule C, C-EZ, or F.
On each line of your separate Schedule C, C-EZ, or F, you must enter your share of the applicable income, deduction, or loss. You must also file a separate Schedule SE to pay self-employment tax.
On each line of your separate Schedule C, C-EZ, or F, you must enter your share of the applicable income, deduction, or loss. You must also file a separate Schedule SE to pay self-employment tax.
Once made, the election can be revoked only with the permission of the IRS. However, the election technically remains in effect only for as long as the spouses filing as a qualified joint venture continue to meet the requirements for filing the election. If the spouses fail to meet the qualified joint venture requirements for a year, a new election will be necessary for any future year in which the spouses meet the requirements to be treated as a qualified joint venture.
Material Participation
If the business activity was not a rental activity and the taxpayer met any material participation tests in the IRS instructions for Schedule C, or the exception for oil and gas applies (explained in IRS instructions), mark the Yes check box. Otherwise, mark the No check box.
If you select the No box, this business is a passive activity.
Limit losses. If you marked the No check box and the taxpayer has a loss from this business, you may have to use Form 8582 to figure out the allowable loss, if any. Generally, the amount you claim for a loss from passive activities cannot exceed the amount you earned. For details, see IRS Publication 925, Passive Activity and At-Risk Rules.
If the taxpayer has a profit from this business activity but has current-year losses from other passive activities or has prior-year unallowed passive activity losses, see the IRS instructions for Form 8582.
This information applies to all years of the UltimateTax software.
Solution Articles:
