though our K-1's will end up on the same tax return? The business shows a loss, so I think her loss is ordinary for offset against her ordinary other income. But I only have a money interest in the partnership and will show it as passive. According to my studying, if one spouse participates then the other spouse qualifies, even if the other spouse did not have any interest in the activity (but I do have an interest).
Yes, you can differing interests. And with CA's community property law each of you owns 1/2 of the other's interest anyway.
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