Husband and Wife LLC on Schedule C

[NECPA in NEBRASKA]

I have seen a few postings on another forum that the IRS has now come out and said that husband and wife owned LLC's can not be filed on Schedule C's. If this is true, I need to change my game plan on some returns. I haven't seen this anywhere but on taxtalk. A couple of the seminars that I attended last year were promoting that we could do this. I guess the IRS changed their minds again. Has anyone else heard about this?

Thanks!

Bonnie

[Lloyd Hudson]

Do not know if this link will work

http://www.irs.gov/businesses/small/articl...=177376,00.html

If not it is on the IRS web site under Husband and wife unincorporated business, requires two schedule C"s divided according to each participation and SE on both parties

[michaelmars]

why do this? STOP all comingling of llc's and assets or save the money in setting up an llc. An llc protects you against actions of your Partner so why combine them on the same C. Keep them separate so if one spouse gets a judgement or claim against them the other spouse will be protected.

[NECPA in NEBRASKA]

Thank you, Lloyd. I see that it doesn't include LLC ownership by spouses. Rats!

[David]

It also doesn't apply to general or limited partnerships according to the link. So what's left other than a sole proprietorships? And they were filed on Sch C anyway. So what's the big change that everyone is talking about?

I must be missing something here. It doesn't seem like anything is different.

Thanks,

David

Thank you, Lloyd. I see that it doesn't include LLC ownership by spouses. Rats!

[mcb39]

I have seen a few postings on another forum that the IRS has now come out and said that husband and wife owned LLC's can not be filed on Schedule C's. If this is true, I need to change my game plan on some returns. I haven't seen this anywhere but on taxtalk. A couple of the seminars that I attended last year were promoting that we could do this. I guess the IRS changed their minds again. Has anyone else heard about this?

Thanks!

Bonnie

I know that you can split them in Community Property States, such as mine. Just check the "joint" box at the top of the Sch C page and the SE gets split. In WI, an added advantage is the Married Couple Credit which is lost if only one spouse has income.

[kcjenkins]

Well, I have to agree with MichaelMars on this one. I know a lot of you like to do this, but I always wonder why you 1) cheat yourself out of doing [and charging for] a 1065, and 2) cheat the clients out of some of the protection that they set up the LLC to provide to them? What is the point of what you are doing? I can just imagine if, down the line, the clients are sued, and have to go to court, and are asked to provide proof, in the form of tax returns, that the assets are in an LLC, and thus protected. I'd think that if they then had to admit that they had no such returns, their lawyer would be advising them to sue you for their resulting loss in that case. And why? Just to save THEM from having to pay you for a 1065 return that they should have filed?

[OldJack]

I agree with KC. I would not even consider filing a partnership on 1040 Sch-C. There are just too many reasons not to file Sch-C, KC and others have pointed out the main one with item #2.