Business & farm

Based on your facts I have the following comments:

1. When you have a multi-member LLC you have a number of options as to entity choice:
1. The default is to be treated as a partnership
2. You can elect to be an association and then taxed as a C corporation
3. If you are an association you can also elect to be treated as an S corporation
4. If the husband and wife are in a community property state, they may qualify as a qualified joint venture.  However, Colorado is not a community property state so this is not an option.
2. It appears that you chose the default, which is to be taxed as a partnership.
3. You cannot just choose to be a partnership one year and then change to an other entity type without some type of notification to the IRS which may or may not have tax consequences.
4. A multi-member LLC can become a single member LLC (SMLLC), however, for this to occur the LLC needs to go from two members to a single member.  For you to do this, you would need to "buyout" one of the member's.  I realize this may seem odd if you are married, but the fact is, this is a two member LLC.
5. Going from a partnership to a SMLLC is discussed in IRS revenue procedure 99-6.  This most likely will not be a significant issue for you since you are married, and I assume filing a joint tax return.
6. Additionally, since you organized the LLC under state law, there may be some state filings required with the Colorado Secretary of State.
7. So if you do "buyout" one of the members, then you file a form 1065 through the date of the purchase and the final 1065 is due the 15th day of the third month following the month of the buyout / termination of the multi-member LLC.  Include a statement with the final form 1065 that the LLC terminated in accordance with Revenue Procedure 99-6.
8. Once the entity becomes a SMLLC, the activity will then be required to include the activity on the 1040 Sch C.