Can and/or Should a Husband and a Wife Form a Single Member Disregarded Entity

Virjinia (“Jina”) V. Koultchitzka


Phone: (719) 471-7958

My assistant: Adrienne Belton at (719) 226-7745

Practice Area

Estate Planning and Probate, Corporate Formation and Organization, Business and Commercial Law, Contract Law, Real Estate Law, General Practice


University of Denver (J.D., 2005)
Colorado State University (B.A., Political Science – International and Comparative Studies, cum laude, May 2001)

Can and/or Should a Husband and a Wife Form a Single Member Disregarded Entity

Estate Planning and Probate, Corporate Formation and Organization, Business and Commercial Law, Contract Law, Real Estate Law, General Practice

Specifically related to a limited liability company (“LLC”), what are the pros and cons of setting up the LLC as (i) a single member disregarded entity – i.e., husband and wife owning the membership interest(s) as joint tenants with right of survivorship; vs. (ii) a partnership – i.e., husband owning a 50% membership interest and wife owning a 50% membership interest? Most certainly when answering this question, consult with a tax professional, a legal professional, and the website where the IRS Tax Products Coordinating Committee has answered the underlying question.

Question: Can a husband and wife operate a business as a sole proprietorship or do they need to be a partnership?

Answer: Unless a business meets the requirements listed below to be a qualified joint venture, a sole proprietorship must be solely owned by one spouse, and the other spouse can work in the business as an employee. A business jointly owned and operated by a husband and wife is a partnership unless the spouses elect to be treated as a qualified joint venture or, in a community property state. Rev. Proc. 2002-69 applies.

Requirements for a qualified joint venture:

  • The husband and wife, who file a joint tax return, are the only members in the joint venture;
  • The business is owned and operated by the spouses as co-owners (and not in the name of a state law entity such as an LLC or LLP);
  • The husband and wife must each materially participate in the business; and
  • Both spouses must elect qualified joint venture status on Form 1040 by dividing the items of income, gain, loss, deduction, credit and expenses in accordance with their respective interests in such venture and each spouse filing with the Form 1040 a separate Schedule C, C-EX, or Form 4835 accordingly, and, if required, a separate Schedule SE to pay self-employment tax.

Under specific circumstances, a partnership arrangement might make sense as follows:

  1. Separating the entity from husband and wife individually and filing a separate Form 1065;
  2. If there is ever separation/divorce, a partnership arrangement would make the separation/divorce easier;
  3. For purposes of estate planning, a 50/50 tenancy in common creates a balance between the husband’s and wife’s estates; and
  4. A 50/50 tenancy in common partnership allows the husband and wife individually to gift/ transfer membership interest(s) to their children, if any.


If you would like to discuss the above-referenced matter(s), please contact Jina today.


  • El Paso County Bar Association Certificate of Appreciation – Law Day (2012)
  • Colorado Bar Association Certificate of Achievement – (2012)
  • Colorado State High School Mock Trial Coach (2012)
  • Gray’s Pupilage Wendelken S. Inn of Court Appreciation Award (2009)
  • Gray’s Pupilage Wendelken S. Inn of Court Nominee
  • American Inns of Court Best Program – Justice in Baghdad, Culture, Conflict, and Challenges (2008)
  • Colorado Springs Business Journal Rising Stars Award (April 24, 2008)
  • Bryan S. Gardner Outstanding Young Lawyer Award (Oct. 16, 2007)
  • Nominated for the University of Denver Outstanding Student Award (2005)
  • El Paso County and Colorado Bar Associations
  • El Paso County Bar Association (EPCBA) Board of Governors (Board of Governors elected rep. & Trustee, (2014-17)
  • Board of Trustees (Trustee, 2010-12)
  • EPCBA Strategic Planning Force Committee (Member, 2010)
  • EPCBA Lawyer Referral Services (Member)
  • EPCBA New Members/Swearing-In (Chair, 2008-current)
  • Ben S. Wendelken American Inn of Court (Executive Committee Member 2007-14)
  • American Inns of Court Program Awards Committee (2012-13)
  • EPCBA New Lawyers Section (Chair 2006-2010)
  • American Bar Association State Membership Chair Program (2009)
  • Legal Aid Foundation (Committee Member 2005 – 08)

Law School Activities

  • Denver Journal of International Law and Policy (2003-05)
  • International Human Rights Advocacy Center (2003-05)
  • Asylum Project (2003-05)
  • University of Denver Clinical Programs, Advanced Criminal Law Clinic (2005)

Council of Neighbors and Organizations (Attorney/Advisory Committee Member, December 2014 – current). CONO works to be a strong, diverse organization recognized throughout the Pikes Peak region as an impartial neighborhood representative serving the needs of neighborhoods, building community and increasing the capacity of local governments and public and private organizations to resolve community issues. For more information, go to:

  • The Chamber of Commerce (Member)
  • Genny’s Hope Foundation (Board of Directors Member 2012 - current). GHF's mission is to increase the number of committed enrollments on the bone marrow donor registry by generating awareness, interest, and the desire of donors to test and register. GHF recruits new bone marrow/stem cell donors and helps them get enrolled at Be the Match, the U.S. registry, or DKMS, an international center. Money raised is used to pay for lab processing of cheek swab kits and to raise awareness for the need to increase donor. registrations.
  • Downtown Partnership, Colorado Springs (Member)
  • El Paso County Bar Foundation (Board of Directors Member, 2008-14; Ex-officio Member currently)
  • Commercial Women’s Network (Member)
  • Participate as a volunteer in community Law Day Activities; Christmas in February (post-holiday party for unprivileged children organized and hosted by the CBA-YLD in Colorado Springs)
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  • Colorado Bar Association Mediation Training (40-hour Certification, Jan. 2011)
  • Colorado Bar Association Leadership Training (COBALT) (2010)
  • University of Denver (J.D., 2005)
  • Colorado State University (B.A., Political Science – International and Comparative Studies, cum laude, May 2001)
  • State Management School New Bulgarian University (Associate Degree, Business Administration and Management, May 1995)
  • El Paso County Bar Association
  • Colorado Bar Association

Corporate Formation and Organization

  • Establishment of corporations, limited liability companies (LLC), partnerships and trusts
  • Chapter S (also referred to as S corp.), EIN and 501(c)(3) election
  • Non-profit and tax-exempt organizations
  • Trade names, trademarks and service marks
  • Business planning and joint ventures
  • Directors’ and officers’ liability
  • Non-compete and non-disclosure agreements
  • Franchising and distribution contracts
  • Purchase and sale of business and business succession
  • Shareholder agreements
  • Board Minutes and By Laws

Business and Commercial Law

  • Buy-sell agreements
  • Commercial litigation
  • Secured transactions
  • Collections and debtor-creditor work

Contract Law

  • Drafting and review of contracts
  • Mechanic liens

General Practice

Estate Planning and Probate

  • Wills
  • Trusts
  • Living wills
  • Power of attorney and appointment
  • Probate and estate administration
  • Business succession planning and tax planning

Real Estate Law

  • Purchase and sale of residential and commercial property
  • Residential and commercial leasing
  • Real estate litigation
  • Conveyancing
  • Land use issues

Have a question or need to schedule a consultation?

Call today for additional information regarding any legal question. Our depth of experience is matched by our willingness to confidentially listen to your individual legal questions. (719) 471-7958