Our farmer customers who operate as sole proprietors open accounts using their social security numbers. If a farmer would like their spouse to be a co-owner on a farm account (e.g. John Doe or Jane Doe Farm Account), can the account still be classified as a sole proprietorship? In the past, we have allowed only one owner on a sole proprietorship account, with a spouse listed as an authorized signer. What is the proper way to title this type of account?

We are not aware of any prohibition against a sole proprietor account being titled in the name of two spouses. Under the Internal Revenue Code, two spouses who run a business together may file a tax return as a sole proprietorship if they fulfill all the requirements for being considered a “qualified joint venture.” The account can be titled in both spouses’ names, and they will co-own the sole proprietorship account when they both sign the account agreement establishing account ownership.

For resources related to our guidance, please see:

IRS webpage, FAQ on married couples’ sole proprietorships (“A married couple who jointly own and operate a trade or business may choose for each spouse to be treated as a sole proprietor by electing to file as a qualified joint venture. Requirements for a qualified joint venture:

The only members in the joint venture are a married couple who file a joint tax return,

The spouses own and operate the trade or business as co-owners (and not in the name of a state law entity such as an LLC or LLP),

Both spouses materially participate in the trade or business, or maintain a farm as a rental business without materially participating (for self-employment tax purposes) in the operation or management of the farm, and

Both spouses must elect qualified joint venture status. . . by dividing the items of income, gain, loss, deduction, credit, and expenses in accordance with their respective interests in such venture. . . .”)

Internal Revenue Code, 26 USC 761(f)(1) (“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.”)

Internal Revenue Code, 26 USC 761(f)(2) (“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.”)

Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank or trust company transacting business in this State has been made or shall hereafter be made in the names of 2 or more persons payable to them when the account is opened or thereafter, the deposit or any part thereof or any interest or dividend thereon may be paid to any one of those persons whether the other or others be living or not, and when an agreement permitting such payment is signed by all those persons at the time the account is opened or thereafter the receipt or acquittance of the person so paid shall be valid and sufficient discharge from all parties to the bank for any payments so made.”)