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>>>No, you can't combine the two schedule Cs.<<<

OK but going forward can we create a partnership and have all expenses come of the top before distributing net income?

How do a husband and wife that run a small business together file. Is my problem that each consulting payment comes to one or the other personally and not to a named business organization?

>>>>But you can take a hard look at the expenses you're reporting.

Do you really have them on the right schedule C? Would it be reasonable to allocate some of the expenses from the loss schedule C to the gain schedule C?<<<

Well the expenses are all travel expenses, generally this is roughly 30% of gross revenues. However, this year one of us had some legal issues relating to previous work that required a the involvement of a lawyer to straighten out. While the amount was small I could not do my normal consulting work until it was resolved. As a result I had very little income. The legal bill was twice what my gross receipts were for the year. I do not see how this could be shifted to my wifes company.

>>>>Are you deducting expenses in the right year? Did you prepay for expenses that you will actually incur in the following year?>>>>>


>>>>>>Are you claiming section 179 expense? You could reduce the amount you elect and push some of the deduction into future years. Did you expense something that really should be capitalized and depreciated?>>>>

I do not think that legal expenses are section 179? But I will check.
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