No box for "JOINT" option on Sch C this year?

[Lucho]

My clients want to share 50/50 self-employment for the year.

Any help please is appreciated.

Lucho.

[mcb39]

Lucho....this was discussed in detail a couple of months ago. This year, we have to physically split the income and deductions between the couple. Apparently the IRS was worried that too many taxpayers in non-community property states were taking advantage of "check the box" instead of filing a Partnership. This has been one of my biggest thorns this year and I have wasted more time splitting income and expenses between spousal small businesses.

[Lucho]

Lucho....this was discussed in detail a couple of months ago. This year, we have to physically split the income and deductions between the couple. Apparently the IRS was worried that too many taxpayers in non-community property states were taking advantage of "check the box" instead of filing a Partnership. This has been one of my biggest thorns this year and I have wasted more time splitting income and expenses between spousal small businesses.

Thank you Marilyn.

I sent back my clients and they will come back tomorrow. If possible for you, would you guide me on how to find that post so I can red it.

Thank you again

Lucho

[mcb39]

I spent hours on one this week. Now I MAY have to go and undo it all because spouse drew UC and have to ask if she is sure she wants me to do this. I don't have Excel and don't have time to learn anything new, let alone all of this splitting. I like Linda's idea better than fredazcpa's. However, I like things neat and tidy and wound rather do it correctly (whatever that means).......these are setting me so far behind and many more to come. It is like yesterday when I struggled with a MFJ and two MFS returns to end up with practically the same result. (and, yes, I did the worksheet, but couple was divorced in Feb and want to see the results both ways.)

Also, everyone is waiting to do FAFSA, like right away and the STRESS around here is TREMENDOUS!

Of course, this was discussed in detail a few weeks ago. Thank you IRS for this huge Sched C stumbling block.

--------------------

MARILYN

Lucho...go to search box in upper right hand corner. Type in "splitting" You will find all of the discussions about this subject. This is a copy and paste of my 2 cents worth. The thread was actually started by Linda and Buddy. There was also a discussion prior to this one. Good Luck....

[Lucho]

Thank you again Marilyn. I found the discussion. Lucky I do not have many clients that wants to split.

Have a nice Easter

Lucho

[Sasha]

The official word we were given from the IRS says "do a 1065." (Which makes it no less lame, but it just is.)

[mcb39]

The official word we were given from the IRS says "do a 1065." (Which makes it no less lame, but it just is.)

A 1065 is not required in community property states such as WI........

[David1980]

A 1065 is not required in community property states such as WI........

For the current tax year I can't find any instructions from the IRS indicating a single schedule C with two schedule SE's is allowed, even in community property states. It's entirely possible that they removed such instructions due to the creation of the qualified joint ventures in 2007. A move which I think was pretty stupid, why not just add a checkbox to the official form and allow the software companies to continue doing it as had become industry standard and normal in tax practices even in non-community property states.

That said, there's nothing stopping a software company from including a checkbox which automatically splits it into two separate schedule C's. Why should it be a manual process when it would be a few hours of programming to get software to do it?

[Sasha]

That said, there's nothing stopping a software company from including a checkbox which automatically splits it into two separate schedule C's. Why should it be a manual process when it would be a few hours of programming to get software to do it?

I have some data on that somewhere on my work computer as to why it's not set up that way; I'll have to dig around for it. Not necessarily saying I buy it, just that there is a statement somewhere about it.

[taxxcpa]

I notice that Drake still gives you the choice on Schedule C for 'T' 'S' or 'J'. I haven't used the joint designation this year, but apparently it depends on your software company's interpretation.

[joanmcq]

David, just because its the 'industry standard' doesn't mean its correct. In fact its the non-community property preparers that didn't know what the heck they were doing in regard to that little check-box that in my opinion, screwed it up for those of us that could rightly split the Sch C. Since when is 'everyone is doing it' an excuse for doing something incorrectly?

[David1980]

David, just because its the 'industry standard' doesn't mean its correct. In fact its the non-community property preparers that didn't know what the heck they were doing in regard to that little check-box that in my opinion, screwed it up for those of us that could rightly split the Sch C. Since when is 'everyone is doing it' an excuse for doing something incorrectly?

I wasn't saying that it was acceptable or correct, just that people were doing it. The point was the IRS could have just added a checkbox to the real Schedule C to match what all the software companies did. Most people would not have even noticed a difference because it would have matched the existing method. Instead, they made qualified joint ventures and required two Schedule C's be prepared.

[kcjenkins]

I think the one point that some are missing is that if it is going to take a lot of work to 'split' the Sch C, doing a 1065 is not only 'proper' but also cost efficient for the client and for you. I think sometimes we can't see the forest for all those trees in the way. Either you are cheating yourself, but doing a lot of extra work and not charging for your time, or you are charging the client for the extra time when you could have transfered the assets to a 1065 easier than you could split them, and then the 1065 is no harder to do than the one Sch C. Sure makes it easier 'down the line', too, when items are sold, disposed of, etc.

[joelgilb]

It shouldn't be that difficult to split the sched c.

In the last post of this issues a few suggested to put all on one sched c, thend put a one line deduction for 1/2 to spouse and put that on the spouses sched c. Wallah almost as easy as checking the former Joint box.

On the other hand it was also suggested to incorporate the client and do an S-Corp election as this would potentially save them Soc Sec Taxes.

[joanmcq]

I wasn't saying that it was acceptable or correct, just that people were doing it. The point was the IRS could have just added a checkbox to the real Schedule C to match what all the software companies did. Most people would not have even noticed a difference because it would have matched the existing method. Instead, they made qualified joint ventures and required two Schedule C's be prepared.

The issue is not the checkbox really; its that a joint schedule C was inaccurate everywhere but in community property states. Otherwise, you were a partnership, pure and simple. And a partnership files a 1065, not a Sch C. And unless you are in a community property state, the business is not necessarily owned 50/50; in fact it is unlikely that it is. In community property states, by law a joint business is 50/50. And it isn't the IRS that make the laws, they just follow them.

[mcb39]

Which brings up the question....."Who ever thought up the idea of Community Property States as opposed to the alternative, and why?" This is just another PITA issue. I thought this was the United States of America.....

[Gail in Virginia]

I thought that I had read that the IRS was now allowing husband/wife partnerships to file Sch. C's as opposed to 1065 as long as it was not an LLC. So it seems odd that this is the year that they eliminate that check box to me. I have not needed it, but I can see where it would be helpful now.

[David1980]

I thought that I had read that the IRS was now allowing husband/wife partnerships to file Sch. C's as opposed to 1065 as long as it was not an LLC. So it seems odd that this is the year that they eliminate that check box to me. I have not needed it, but I can see where it would be helpful now.

Yeah, that's the previously mentioned qualified joint venture. If you read the Schedule C instructions you'll see they removed the instructions for filing 1 Schedule C with two SE's for all states including community property states, and that they added instructions on how to preparer a qualified joint venture return. You split the income/expenses/etc by the ownership percentage and preparer two Schedule C's.

It'll be a pain until one of the software companies add a checkbox/percentage entry to a worksheet or something and has the software do the splitting to two Schedule C's automatically. (Then probably other software companies will follow suit.)