A joint venture (JV) generally involves two or more persons joining together for a particular project. The persons can be individuals, for-profit entities, non-profit organizations, governments, or trusts. 

Joint ventures are generally treated as partnerships for U.S. federal income tax purposes and should file an annual Form 1065 (US Return of Partnership Income). However, there are some critical differences between a joint venture and a partnership arrangement. 

  1. Agreement. A “Joint Venture Agreement” should govern the relationship between parties in a JV, while a “Partnership Agreement” governs the relationship between parties in a partnership.  
  2. Principal Purpose. The parties form a joint venture to accomplish a single goal or project, and once the parties complete the project, the JV terminates. In a partnership context, the parties form a partnership to engage in a continuing trade or business with a for-profit motive. The partners in a partnership will share in the profits, losses, debts, and assets of all activities conducted by the partnership.
  3. Legal Entity. In most cases, a JV will not have a legal entity formed under state law. When creating a partnership arrangement, the parties generally open a Limited Liability Company (LLC) or a limited partnership (LP). 
  4. Taxes. A partnership is required to report their activities on an annual Form 1065 filing. Under certain circumstances, the Internal Revenue Service (IRS) allows taxpayers to “elect out” of partnership status for federal income tax purposes when partnership status would otherwise be required1. Joint ventures aren’t necessarily required to file Form 1065; however, many JV’s will file Form 1065 to report each participants share of any income and expense.  
  1. Treas. Reg. § 1.761-2(a) ↩︎