Do you co-own with a spouse or someone else?
If you are partners with someone, you need to file either as a corporation or as a partnership. You would need to issue Forms W-2 to each of you. You would also need to issue Forms K-1.
You may have a QJV with your spouse. In this case, your profit flows through to your 1040 via Schedule C.
Definition of a Qualified Joint Venture
A qualified joint venture is a joint venture that conducts a trade or business where (1) the only members of the joint venture are a married couple who file a joint return, (2) both spouses materially participate in the trade or business, and (3) both spouses elect not to be treated as a partnership. A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company) (See below). Note also that mere joint ownership of property that is not a trade or business does not qualify for the election. The spouses must share the items of income, gain, loss, deduction, and credit in accordance with each spouse's interest in the business. The meaning of “material participation” is the same as under the passive activity loss rules in section 469(h) and the corresponding regulations (see Publication 925, Passive Activity and At-Risk Rules). Note that, except as provided in section 469(c)(7), rental real estate income or loss generally is passive under section 469, even if the material participation rules are satisfied, and filing as a qualified joint venture will not alter the character of passive income or loss.
Spouses as Joint Venture LLC Owners. ... However, if the joint venture is incorporated as a legal entity -- such as an LLC -- under state law, the IRS qualification is not allowed and the venture is treated as a partnership unless the married joint venture owners live in a community property state.
