Discussion:Schedule C or Partnership (H & W own business)

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Discussion Forum Index --> Tax Questions --> Schedule C or Partnership (H & W own business)


Old tax guy (talk|edits) said:

5 April 2006
T/P owns a distributorship where he leaves home every day and goes to clients where he sells various products. Husband does all the selling and wife helps with the paper work.

Should husband be owner and wife employee, or both owners (split income ?) They both signed papers to buy the distributorship.

JR1 (talk|edits) said:

5 April 2006
I think you can justify putting this on a Sch. C. And nothing would be shown to her. If at some point her level of involvement rises, you could consider putting her on for some wages and tossing money into retirement plan, or going to a 1065 for same reason, but you're going to give more to SS system if they're over the limits...and I should note that by keeping the earnings in the high earner's name, it increases those SS benefits down the road...

Natalie (talk|edits) said:

6 April 2006
Correct me if I'm wrong, but I thought if husband and wife operate the same business together, they had to file a partnership return, even if no formal partnership document had been signed.

Meadowglenatmonroe@frontiernet.net (talk|edits) said:

6 April 2006
Thursday, April 06, 2006

Hello, Old tax guy.

What is the legal, and tax, entity of this distributorship business? This question needs to be asked for any accurate analysis.

Nola999 (talk|edits) said:

6 April 2006
In community property states, it's okay to file either a partnership or a Sch C for a business that is owned jointly by husband and wife. You can split the income, filing two Sch SEs.

JR1 (talk|edits) said:

6 April 2006
But Natalie, define 'run a business together'...I'd contend that he's running the business, and like many business owners, she's keeping things clear at home, where the office is...This happens all the time, and in now way should it be considered a partnership. Unless they want it to...

Natalie (talk|edits) said:

6 April 2006
I see your point JR. My understanding is if they jointly own the business, operate it and share in the profits, then they would be required to file a partnership return.

JR1 (talk|edits) said:

6 April 2006
That's what IRS says, indeed. . .

WillyB (talk|edits) said:

7 April 2006
See Rev. Proc. 2002-69. I acknowledge RLMCPA for pointing this out in a recent post.

WillyB

Riley2 (talk|edits) said:

7 April 2006
Old tax guy appears to practice in MD, a non community property state. It does appear that a 1065 would be appropriate.

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