@AliciaP1 = Thanks for prompt reply. I checked the link you provided and its second para is this (emphasis added):
A Business Owned and Operated by the Spouses through a Limited Liability Company Does Not Qualify for the Election
Only businesses that are owned and operated by spouses as co-owners (and not in the name of a state law entity) qualify for the election. See Rev. Proc. 2002-69, 2002-2 C.B. 831, for special rules applicable to married couple state law entities in community property states.
Searching fpr that Rev. Proc. leads to https://www.irs.gov/pub/irs-drop/rp-02-69.pdf which clarifies that in community property states, such business organizations can be treated as disregarded entities. This is what other answers on this thread (provided by @DS30 and many others).
Appreciate if you could clarify once again the federal tax treatment since your advice seems to be different than many other similar threads such as thread by @Opus 17 (CA obligations are separate and not in question).
Thanks
