Business & farm

Thanks for that detail.

You have a number of issues and possibly some confusion on entity structure.  I will provide some general guidance and explanation:

• A QJV requires both spouses to be involved
• In general, a QJV cannot be organized as an LLC.  There are exceptions for community property states, however, TN is not one of those states.
• So just to be clear, you can't have a QJV and be deemed a sole proprietor.
• What you may have done in the past, is the past.  This is not the forum to discuss all those details and what was or should have been done.  We will only discuss your current facts and resolution.
• Based on your facts, you have effectively closed and liquidated your LLC taxed as a partnership.  You need to file a final return.
• Since you were an LLC taxed as a partnership, you should have been maintaining a basis schedule of your investment in the LLC; each of you should have a basis schedule.
• All property distributed to you will be treated as a liquidating distribution.  This will need to be reported on the K-1 using Code C.  I will attached a link to the instructions for the K-1.  There is detailed information that needs to be reported as a result of this.
• As a result of the liquidating distribution you may have received "hot assets".  This in general will be depreciation recapture and possibly any receivables (net of payables) if you were on the cash method of accounting.  
• You must determine an overall gain or loss as a result of what you are doing; liquidating the partnership.  If you have hot assets distributed to you, some of your gain will be recharacterized as ordinary income.  It will not change the overall gain or loss, just the character.
• When you distribute out tangible property from the partnership / LLC, you generally take the same basis as the partnership.  However, this allocation of property basis cannot exceed your basis.  If it is either more or less, the regulations have a prescribed method as to what additional adjustments need to be made.
• I recommend you consult with a tax professional to make sure you get started on the right path for 2020; while it may just be nomenclature or semantics in the wording, just to be clear, you cannot be a sole proprietorship and a QVJ in 2020.  Make sure you get guidance in this area as you don't want a foot fault.  See a tax professional.
• Also read the information in the link provided in an earlier response.  I may have provided some other details in that response.
• https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
• As has been noted, this is not an area for the feint of heart.  Partnership tax is complicated and recommend you get some help from a tax professional.
• Finally, you should contact the Secretary of States office.  You most likely need to complete something to dissolve your LLC since LLC's are organized under state law.