By: Martin M. Shenkman, CPA, MBA, JD
The Small Business Act of 2007 added IRC Sec. 761(f) permitting spousal qualified joint ventures (“QJVs”). A QJV is not treated as a partnership for federal tax purposes. If a husband and wife thus own a rental property in an LLC 50/50 they can avoid filing a partnership tax return. Each is instead treated as owning a proprietorship and files tax returns accordingly. Making a QJV election won’t cause self-employment (SE) tax on income from rental real estate that would otherwise not be subject to SE tax. The IRS reasoned that the purpose of a QJV was not to characterize income as subject to SE tax that would not otherwise have been. CCA 200816030.
Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.