Business Owned and Operated — Instruction 1040 (Schedule C)

Generally, if you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. You generally have to file Form 1065 instead of Schedule C for your joint business activity; however, you may not have to file Form 1065 if either of the following applies.

You and your spouse wholly own the unincorporated business as community property and you treat the business as a sole proprietorship. See Community Income, later. Otherwise, use Form 1065. See Pub. 541 for information about partnerships.

Qualified Joint Venture You and your spouse can elect to treat an unincorporated business as a qualified joint venture instead of a partnership if you:

You and your spouse elect to be treated as a qualified joint venture. See Qualified Joint Venture next.
Form 6252 to report income from an installment agreement.
Form 7205 to claim the IRC 179D deduction for qualifying energy efficient commercial building expenses.
Form 8582 to apply a limitation to your loss from passive activities.
Form 8594 to report certain purchases or sales of groups of assets that constitute a trade or business.
Form 8824 to report like-kind exchanges.
Form 8829 to claim actual expenses for business use of your home.
Each materially participate in the business (see Material participation , later, in the instructions for line G);

• Are the only owners of the business; and

File a joint return for the tax year. Making the election will allow you to avoid the complexity of Form 1065 but still give each of you credit for social security earnings on which retirement benefits, disability benefits, survivor benefits, and insurance (Medicare) benefits are based.
Form 8936 to claim the commercial clean vehicle credit.
Form 8960 to pay Net Investment Income Tax on certain income generally from your passive activities.
Form 8990 to determine whether your business interest deduction is limited.
Form 8995 or 8995-A to claim a deduction for qualified business income.

In most cases, this election will not increase the total tax owed on the joint return.

Jointly owned property. You and your spouse must operate a business to make this election. Do not make the election for jointly owned property that is not a trade or business.

Only businesses that are owned and operated by