If a husband and wife jointly own a business in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), they may elect to treat their LLC as a disregarded entity for federal tax purposes.
When Does a Husband and Wife LLC Qualify as a Single Member LLC?
A business entity is considered a qualified entity if:
- The LLC is wholly owned by a husband and wife as community property under the laws of a U.S. state, territory, or foreign country that recognizes community property.
- No person other than one or both spouses is considered an owner for federal tax purposes.
- The business entity is not treated as a corporation under IRC §301.7701-2 .
What if You Live in a Non-Community Property State?
If an LLC is owned by a husband and wife in a non-community property state, the LLC must generally file as a Partnership.
LLCs owned by a husband and wife are not eligible to be treated as “qualified joint ventures,” because an LLC is a state law entity. For more information, see the IRS page: Election for Husband and Wife Unincorporated Businesses .
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