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This doesn't really answer your question.....but your post gave me a shock. I did try to find what you would have to do, but haven't found it with a quick search.

However, one of the easiest things you might be able to do is to keep the partnership, making your husbands allocated portion of the earnings "0". That would be on schedule K-1.

I added that top part to my post...after writing the following...(it's a bit of a disjointed post, but it's late.

For the first few years we filed Schedule C and then the IRS changed the rules and required husband-wife businesses to file as partnerships.

Whew, You scared me. I didn't know about the husband and wife partnership. Now, maybe I'm wrong, but I don't think it was/is a requirement.

"Community property. A husband and wife who own a qualified entity (defined later) can choose to classify the entity as a partnership for federal tax purposes by filing the appropriate partnership tax returns. They can choose to classify the entity as a sole proprietorship by filing a Schedule C (Form 1040) listing one spouse as the sole proprietor. A change in reporting position will be treated for federal tax purposes as a conversion of the entity."

It was mainly so that both the husband and the wife could get Credit for SS earnings.

from the same link....

" Husband-wife partnership. If spouses carry on a business together and share in the profits and losses, they may be partners whether or not they have a formal partnership agreement. If so, they should report income or loss from the business on Form 1065. They should not report the income on a Schedule C (Form 1040) in the name of one spouse as a sole proprietor.

Each spouse should carry his or her share of the partnership income or loss from Schedule K–1 (Form 1065) to their joint or separate Form(s) 1040. Each spouse should include his or her respective share of self-employment income on a separate Schedule SE (Form 1040), Self-Employment Tax. This generally does not increase the total tax on the return, but it does give each spouse credit for social security earnings on which retirement benefits are based."

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