Included in the Small Business and Work Opportunity Act of 2007 is a
provision that allows a husband and wife who file a joint return to elect out
of the partnership rules. Thus, a joint venture between them is not treated
as a partnership for tax purposes. This new rule takes effect for 2007.

All items of income, gain, loss, deduction and credit are divided between the spouses according to their respective interests in the venture, and each spouse takes into account his or her respective share of these items as if
they were attributable to a trade or business conducted by the spouse as a sole proprietor. Thus, each electing spouse will report his or her shares on
the appropriate form, such as Schedule C.

A qualified joint venture means any joint venture involving the conduct of a trade or business if:
(1) The only members of the joint venture are a husband and wife,
(2) Both spouses materially participate (1) in the trade or business, and
(3) Both spouses elect the application of this rule.

(1) Generally to qualify, 500 hours of participation are required during the year, or if participation is less than 500 hours, the taxpayers must provide substantially all of the participation.

Notwithstanding other self-employment rules, each spouse's share of
income or loss from a qualified joint venture is taken into account under the above rules in determining the spouse's net earnings from self-employment. Thus, each spouse will receive credit for his or her self-employment tax contributions for purposes of receiving Social Security benefits. However,
this rule is not intended to prevent allocations or reallocations, to the extent permitted under pre-2007 Small Business Act law, by courts or by the Social Security Administration of net earnings from self-employment for purposes
of determining Social Security benefits of an individual.