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They can choose to classify the entity as a sole proprietorship by filing a Schedule C (Form 1040) listing one spouse as the sole proprietor.A change in reporting position will be treated for federal tax purposes as a conversion of the entity.An LLC may be classified for federal income tax purposes as either a partnership, a corporation, or an entity disregarded as an entity separate from its owner by applying the rules in Regulations section 301.7701-3.See Form 8832 and section 301.7701-3 of the regulations for more details.Select the Payments tab on the front page of for more information.
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However, a joint undertaking merely to share expenses is not a partnership.
Capital is ordinarily an income-producing factor if the operation of the business requires substantial inventories or investments in plants, machinery, or equipment.
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