[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 868 Introduced in House (IH)]







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.
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