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Pros and Cons of Partnership LLC's vs qualified joint venture LLC's.

Dodge City, KS |

I converted 3 existing businesses to multi member LLC's at the end of 2007. My husband and I are the only members and I am wondering what the advantages and disadvantages are of having them as partnerships or qualified joint ventures.

Thank you for your help.

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Attorney answers 2


I am not admitted to practice in your state. The following is provided for information only and is not provided as legal advice in your specific situation.

Qualified JVs are NOT legal entities. They are sole proprietorships that the IRS permits to be owned by husband and wife which otherwise would be a partnership. You can't do this in LLC form.

This means you can file using two Schedule C's instead of as a partnership.

The IRS says you are a "qualified joint venture" if:

(1) the only members of the joint venture are a husband and wife 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.

You make the election on your joint Form 1040 and you file separate Schedule C forms showing the percentage interest of each of the spouses on their respective Schedule C forms. For example, if your "qualified joint venture" showed a profit of $10,000, and you and your spouse had equal shares, you would each report $5,000 profit on your own Schedule C. The full $10,000 would be shown on the Form 1040.

Go to your cpa and run the numbers to see what the tax bite difference would be. You're asking a very personal, fact specific question best left to factual answer.

Good luck.


Using the written documentation you have is a good place to begin. Contact a local lawyer - many may give you a free consultation for an hour - to discuss your specifics. Far too many variables exist in the short post you wrote for any further observation by me. Many Kansas attorneys have information posted here on Avvo.

Too many variable exist for a proper online observation.

You might find my Legal Guide helpful "How to Choose A Lawyer For You"

You might find my Legal Guide helpful " What Do I Tell My Lawyer"

No one can know what the record is in the case because online we cannot see your documents. You need a lawyer. Check with a lawyer in your locale to discuss more of the details.

Good luck to you.

NOTE: This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question.

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