In 2007 new tax law allowed a business operated by a husband and wife to avoid the pain of time and money setting up a joint venture as a partnership. Same sex couples in a domestic partnership or married DO NOT get the same treatment with the IRS.
- The President of the United States
On May 25, 2007 the Small Business and Work Opportunity Tax Act of 2007 was signed into law and affect changes to the treatment of qualified joint ventures of married couples not treated as partnerships. The provision is effective for taxable years beginning after December 31, 2006.
The provision generally permits a qualified joint venture whose only members are a husband and wife filing a joint return not to be treated as a partnership for Federal tax purposes. A qualified joint venture is a joint venture involving the conduct of a trade or business, if (1) the only members of the joint venture are a husband and wife, (2) both spouses materially participate in the trade or business, and (3) both spouses elect to have the provision apply.
Under the provision, a qualified joint venture conducted by a husband and wife who file a joint return is not treated as a partnership for Federal tax purposes. All items of income, gain, loss, deduction and credit are divided between the spouses in accordance with their respective interests in the venture. Each spouse takes into account his or her respective share of these items as a sole proprietor. Thus, it is anticipated that each spouse would account for his or her respective share on the appropriate form, such as Schedule C. For purposes of determining net earnings from self-employment, each spouse’s share of income or loss from a qualified joint venture is taken into account just as it is for Federal income tax purposes under the provision (i.e., in accordance with their respective interests in the venture).
Same sex couples under a domestic partnership DO NOT enjoy the same tax treatment with the federal government. Also, same sex couples married in one of the states where it is legal DO NOT enjoy the same treatment with the IRS because of DOMA.
Please consider legislation that would provide equal protection and rights for same sex couples with the IRS. It is a huge legal and tax penalty to force same sex couples to form an IRS sanctioned general partnership or limited liability partnership to run a home business (especially in this economic climate).
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