FAMILY BUSINESS TAX SIMPLIFICATION.

SEC. 8215. FAMILY BUSINESS TAX SIMPLIFICATION.(a) In General.—Section 761 (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 (defining net earnings from self-employment) is amended by striking “, and” at the 121 STAT. 194 end of paragraph (15) and inserting a semicolon, 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 (14), by striking the period at the end of paragraph (15) and inserting “; and”, and by inserting after paragraph (15) the following new paragraph:“(16) 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 December 31, 2006.