MLR

IRS leaves partnership decision up to owners

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The IRS recently advised a husband and wife, who together owned an unincorporated business, that their business would be treated as a partnership unless the couple elected for it to be disregarded (Private Letter Ruling 201411035).

The tax law defines a partnership to include any multi-owner unincorporated organization through or by means of which a business, financial operation or venture is carried on. Regulations allow certain unincorporated organizations to elect out of partnership treatment.

In either case, each spouse is responsible for paying any required self-employment tax on his or her net earnings from self-employment.