Some comments on your question and follow-up responses:
- Essentially when you set up the partnership, based on your facts, you had a decision to make; either file as a partnership, or make the election to file as a qualified joint venture (QJV).
- When you made the election to file as a QJV, you are no longer under the partnership provisions of the tax code. Essentially you have elected out of those provisions.
- One of the provisions to be able to make the QJV election, is a percentage interest in the business must be established for both spouses, so that income, gains, deductions, losses, and credits, and determining net earnings from self-employment can be apportioned appropriately (reflected on your Schedule C). Your agreement was set at 50/50.
- Your quoting commentary in a publication discussing partnership provisions holds no weight as those provisions no longer apply as noted in bullet 2 above.
- You must follow the initial agreement as was in effect when you made the QJV. If you want to deviate from this, you need to terminate the venture and begin a new one with a new agreement. The split between husband and wife is based on ownership. There are no special allocations allowed.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
