110th CONGRESS
1st Session
H. R. 868
To amend the Internal Revenue Code of 1986 to allow a married couple
who operates a unincorporated business as co-owners to file separate self-employment
tax returns.
IN THE HOUSE OF REPRESENTATIVES
February 7, 2007
Mr. DOGGETT (for himself, Mr. BECERRA, Mr. BLUMENAUER, Mr. DAVIS of Illinois,
Ms. DELAURO, Mr. FILNER, Mr. GENE GREEN of Texas, Mr. GRIJALVA, Mr. HINOJOSA,
Mr. HOLT, Mr. KIND, Mr. LARSON of Connecticut, Mr. LEWIS of Georgia, Mr.
MCDERMOTT, Mr. MCGOVERN, Mr. MEEK of Florida, Mr. MOORE of Kansas, Mrs.
NAPOLITANO, Mr. NEAL of Massachusetts, Mr. KENNEDY, Mr. PASCRELL, Ms. SCHWARTZ,
Mr. SHERMAN, Mr. STARK, Mr. THOMPSON of California, Mrs. JONES of Ohio,
Ms. VELAZQUEZ, and Mr. RODRIGUEZ) introduced the following bill; which was
referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a married couple
who operates a unincorporated business as co-owners to file separate self-employment
tax returns.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Family Small Business Tax Fairness Act of
2007'.
SEC. 2. UNINCORPORATED BUSINESSES OPERATED BY HUSBAND AND WIFE AS CO-OWNERS.
(a) In General- Section 761 of the Internal Revenue Code of 1986 (defining
terms for purposes of partnerships) is amended by redesignating subsection
(f) as subsection (g) and by inserting after subsection (e) the following
new subsection:
`(f) Qualified Joint Venture-
`(1) IN GENERAL- In the case of a qualified joint venture conducted by
a husband and wife who file a joint return for the taxable year, for purposes
of this title--
`(A) such joint venture shall not be treated as a partnership,
`(B) all items of income, gain, loss, deduction, and credit shall be
divided between the spouses in accordance with their respective interests
in the venture, and
`(C) each spouse shall take into account such spouse's respective share
of such items as if they were attributable to a trade or business conducted
by such spouse as a sole proprietor.
`(2) QUALIFIED JOINT VENTURE- For purposes of paragraph (1), the term
`qualified joint venture' means any joint venture involving the conduct
of a trade or business if--
`(A) the only members of such joint venture are a husband and wife,
`(B) both spouses materially participate (within the meaning of section
469(h) without regard to paragraph (5) thereof) in such trade or business,
and
`(C) both spouses elect the application of this subsection.'.
(b) Net Earnings From Self-Employment-
(1) Subsection (a) of section 1402 of such Code (defining net earnings
from self-employment) is amended by striking `and' at the end of paragraph
(15), by striking the period at the end of paragraph (16) and inserting
`; and', and by inserting after paragraph (16) the following new paragraph:
`(17) notwithstanding the preceding provisions of this subsection, each
spouse's share of income or loss from a qualified joint venture shall
be taken into account as provided in section 761(f) in determining net
earnings from self-employment of such spouse.'.
(2) Subsection (a) of section 211 of the Social Security Act (defining
net earnings from self-employment) is amended by striking `and' at the
end of paragraph (15), by striking the period at the end of paragraph
(16) and inserting `; and', and by inserting after paragraph (16) the
following new paragraph:
`(17) Notwithstanding the preceding provisions of this subsection, each
spouse's share of income or loss from a qualified joint venture shall
be taken into account as provided in section 761(f) of the Internal Revenue
Code of 1986 in determining net earnings from self-employment of such
spouse.'.
(c) Effective Date- The amendments made by this section shall apply to taxable
years beginning after the date of the enactment of this Act.
END
