Posted Sunday, October 22, 2023
Using the previous example from this chapter, the two insurance agents could simplify life by entering into a joint venture agreement that allowed for revenue and expense sharing, without the formality of the business entity structure above.
Be careful here however! The IRS could impute that this is a partnership and demand a partnership tax return. Not much more will be said here since WCG is not a huge fan of joint ventures in this fashion, and most attorneys say it is very expensive to draft the necessary agreements. Automobile manufacturers have the budget to enter into large joint ventures with finite timelines (like business flirting), and also have a myriad of highly visible problems (brand, employee groups, regulations, etc.).
Jason Watson, CPA, is a Senior Partner of WCG CPAs & Advisors, a boutique yet progressive tax,
accounting and business consultation firm located in Colorado serving clients worldwide.
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Taxpayer's Comprehensive Guide to LLCs and S Corps 2023-2024 Edition