Instructions For Schedule C 1040 - 2016 (Page 2 of 18) in pdf

Form 8824 to report like-kind

ses, you are partners in a partnership,

as terminating at the end of the preced-

exchanges.

whether or not you have a formal part-

ing tax year. For information on how to

Form 8829 to claim actual

nership agreement. You generally have

report the termination of the partnership,

expenses for business use of your home.

to file Form 1065 instead of Schedule C

see Pub. 541.

Form 8903 to take a deduction for

or C-EZ for your joint business activity;

Revoking the election. The election

income from domestic production

however, you may not have to file Form

can be revoked only with the permission

activities.

1065 if either of the following applies.

of the IRS. However, the election re-

You and your spouse elect to be

Single-member limited liability com-

mains in effect only for as long as you

treated as a qualified joint venture. See

pany (LLC). Generally, a single-mem-

and your spouse continue to meet the re-

Qualified Joint

Venture, next.

ber domestic LLC is not treated as a sep-

quirements to make the election. If you

You and your spouse wholly own

arate entity for federal income tax

and your spouse fail to meet the require-

the unincorporated business as commun-

purposes. If you are the sole member of

ments for any year, you will need to

ity property and you treat the business as

a domestic LLC, file Schedule C or

make a new election to be treated as a

a sole proprietorship. See

Community

C-EZ (or Schedule E or F, if applicable)

qualified joint venture in any future

Income, later.

unless you have elected to treat the do-

year.

Otherwise, use Form 1065. See Pub. 541

mestic LLC as a corporation. See Form

Employer

identification

number

for more details.

8832 for details on making this election

(EIN). You and your spouse do not

and for information about the tax treat-

need to obtain an EIN to make the elec-

Qualified Joint Venture

ment of a foreign LLC.

tion. But you may need an EIN to file

You and your spouse can elect to treat

Single-member limited liability com-

other returns, such as employment or ex-

an unincorporated business as a quali-

panies (LLCs) with employees. A sin-

cise tax returns. To apply for an EIN,

fied joint venture instead of a partner-

gle-member LLC must file employment

see the Instructions for Form SS-4.

ship if you:

tax returns using the LLC's name and

Rental real estate business. If you and

Each materially participate in the

employer identification number (EIN)

your spouse make the election for your

business (see

Material

participation, lat-

rather than the owner's name and EIN,

rental real estate business, you must

er, in the instructions for line G),

even if the LLC is not treated as a sepa-

each report your share of income and

Are the only owners of the busi-

rate entity for federal income tax purpo-

deductions on Schedule E. Rental real

ness, and

ses.

estate income generally is not included

File a joint return for the tax year.

Heavy highway vehicle use tax. If you

in net earnings from self-employment

Making the election will allow you to

use certain highway trucks, truck-trail-

subject to self-employment tax and gen-

avoid the complexity of Form 1065, but

ers, tractor-trailers, or buses in your

erally is subject to the passive loss limi-

still give each of you credit for social se-

trade or business, you may have to pay a

tation rules. Electing qualified joint ven-

curity earnings on which retirement ben-

federal highway motor vehicle use tax.

ture status does not alter the application

efits, disability benefits, survivor bene-

See the Instructions for Form 2290 to

of the self-employment tax or the pas-

fits, and insurance (Medicare) benefits

find out if you must pay this tax and vis-

sive loss limitation rules.

are based. In most cases, this election

IRS.gov/trucker

for the most recent

More information. For more informa-

will not increase the total tax owed on

developments.

tion on qualified joint ventures, go to

the joint return.

Information returns. You may have to

IRS.gov and enter “qualified joint ven-

Jointly owned property. You and your

file information returns for wages paid

ture” in the search box.

spouse must operate a business to make

to employees, certain payments of fees

Community Income

this election. Do not make the election

and other nonemployee compensation,

for jointly owned property that is not a

interest, rents, royalties, real estate trans-

If you and your spouse wholly own an

trade or business.

actions, annuities, and pensions. See

unincorporated business as community

Line

I, later, and the 2016 General In-

Making the election. To make this

property under the community property

structions for Certain Information Re-

election, divide all items of income,

laws of a state, foreign country, or U.S.

turns for details and other payments that

gain, loss, deduction, and credit attribut-

possession, you can treat your whol-

may require you to file a Form 1099.

able to the business between you and

ly-owned, unincorporated business as a

your spouse based on your interests in

If you received cash of more than

sole proprietorship, instead of a partner-

the business. Each of you must file a

$10,000 in one or more related transac-

ship. Any change in your reporting posi-

separate Schedule C, C-EZ, or F. Enter

tions in your trade or business, you may

tion will be treated as a conversion of

your share of the applicable income, de-

have to file Form 8300. For details, see

the entity.

duction or (loss), on the appropriate

Pub. 1544.

Report your income and deductions

lines of your separate Schedule C, C-EZ,

Business Owned and

as follows.

or F. Each of you may also need to file a

Operated by Spouses

If only one spouse participates in

separate Schedule SE to pay self-em-

the business, all of the income from that

ployment tax. If the business was taxed

Generally, if you and your spouse joint-

business is the self-employment earn-

as a partnership before you made the

ly own and operate an unincorporated

ings of the spouse who carried on the

election, the partnership will be treated

business and share in the profits and los-

business.

C-2

Instructions For Schedule C 1040 - 2016 Page 2

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