Page 241 - Individual Forms & Instructions Guide

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• Form 8910 to claim a credit for Note. Mere joint ownership of property the application of the self-employment
placing a new alternative motor vehicle that is not a trade or business does not tax or the passive loss limitation rules.
in service for business use. qualify for the election. For more information on qualified
• Form 8960 to pay Net Investment Only businesses that are owned joint ventures, go to IRS.gov/QJV.
Income Tax on certain income from and operated by spouses as
your rental and other passive activities. ! co-owners (and not in the name Reportable Transaction
CAUTION
• Form 8990 to determine whether of a state law entity) qualify for the elec- Disclosure Statement
your business interest deduction is tion. Thus, a business owned and oper- Use Form 8886 to disclose information
limited. ated by spouses through an LLC does for each reportable transaction in which
• Form 8995 or 8995-A to claim a not qualify for the election of a qualified you participated. Form 8886 must be
deduction for qualified business income. joint venture. filed for each tax year that your federal
Single-member limited liability com- income tax liability is affected by your
pany (LLC). In most cases, a sin- Making the election. To make this participation in the transaction. You may
gle-member domestic LLC is not treated election for your rental real estate busi- have to pay a penalty if you are required
as a separate entity for federal income ness, check the “QJV” box on line 2 for to file Form 8886 but do not do so. You
tax purposes. If you are the sole member each property that is part of the qualified may also have to pay interest and penal-
of a domestic LLC, file Schedule E (or joint venture. You must divide all items ties on any reportable transaction under-
Schedule C or F, if applicable). Howev- of income, gain, loss, deduction, and statements. The following are reportable
er, you can elect to treat a domestic LLC credit attributable to the rental real estate transactions.
as a corporation. See Form 8832 for de- business between you and your spouse • Any listed transaction that is the
tails on the election and the tax treat- in accordance with your respective inter- same as or substantially similar to tax
ment of a foreign LLC. ests in the venture. Although you and avoidance transactions identified by the
Information returns. You may have to your spouse will not each file your own IRS.
file information returns for wages paid Schedule E as part of the qualified joint • Any transaction offered to you or a
to employees, certain payments of fees venture, each of you must report your related party under conditions of confi-
and other nonemployee compensation, interest as separate properties on line 1 dentiality for which you paid an advisor
interest, rents, royalties, real estate trans- of Schedule E. On lines 3 through 22 for a fee of at least $50,000.
actions, annuities, and pensions. For de- each separate property interest, you must • Certain transactions for which you
tails, see Line A, later, and the 2022 enter your share of the applicable in- or a related party have contractual pro-
General Instructions for Certain Infor- come, deduction, or loss. tection against disallowance of the tax
mation Returns. If you have more than three rental re- benefits.
If you received cash of more than al estate or royalty properties, complete • Certain transactions resulting in a
$10,000 in one or more related transac- and attach as many Schedules E as you loss of at least $2 million in any single
tions in your trade or business, you may need to list them. But fill in lines 23a tax year or $4 million in any combina-
have to file Form 8300. For details, see through 26 on only one Schedule E. The tion of tax years (at least $50,000 for a
Pub. 1544. figures on lines 23a through 26 on that single tax year if the loss arose from a
Schedule E should be the combined to-
foreign currency transaction defined in
Qualified Joint Venture tals for all properties reported on your section 988(c)(1), whether or not the
If you and your spouse each materially Schedules E. loss flows through from an S corpora-
participate (see Material participation in Once made, the election can be re- tion or partnership).
the Instructions for Schedule C) as the voked only with the permission of the • Certain transactions of interest en-
only members of a jointly owned and IRS. However, the election technically tered into that are the same as or sub-
operated rental real estate business and remains in effect only for as long as the stantially similar to transactions that the
you file a joint return for the tax year, spouses filing as a qualified joint ven- IRS has identified by notice, regulation,
you can elect to be treated as a qualified ture continue to meet the requirements or other form of published guidance as
joint venture instead of a partnership. to be treated as a qualified joint venture. transactions of interest.
This election, in most cases, will not in- If the spouses fail to meet the qualified
crease the total tax owed on the joint re- joint venture requirements for a year, a See the Instructions for Form 8886
turn. By making the election, you will new election will be necessary for any for more details.
not be required to file Form 1065 for future year in which the spouses meet Limitation on Losses
any year the election is in effect and will the requirements to be treated as a quali- If you report a loss from rental real es-
instead report the income and deduc- fied joint venture. tate or royalties in Part I, a loss from a
tions directly on your joint return. If you Rental real estate income is generally partnership or S corporation in Part II, or
and your spouse filed Form 1065 for the not included in net earnings from a loss from an estate or trust in Part III,
year prior to the election, the partnership self-employment subject to self-employ- your loss may be reduced or not allowed
terminates at the end of the tax year im- ment tax and is generally subject to pas- this year. You must apply the following
mediately preceding the year the elec- sive loss limitation rules. Electing quali- rules to your loss.
tion takes effect. fied joint venture status does not alter • Basis rules apply to losses from a
partnership or S corporation. See Basis

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