My wife is planning to start a business in which I will be helping out a bit (say, 80-20 work split between her and me, with my participation potentially increasing in the future). We are thinking about forming this as a LLC we both will co-own. For federal tax purposes, will this be treated as a SMLLC or will it be a passive activity for me due to not meeting the material participation tests? At tax time, do we file one Schedule C, two or a Form 1065 + two Schedule K-1s?
We live in WA so we’re in a community property state.
Thanks.
