Thank you everyone for the help in talking this over and suggestions of things to read. I've finally come up with the answer. The Joint Venture, a Special Partnersip, is to be reported on a Form 1065 for partnership treatment, but only used as a flow-thru vehicle. My client should've received a Form K-1 to pass his 25% income of profits. The other venturer should've received on his K-1 the interest expense he paid for the loan. I realized I had another client for 35 yrs. that a Form 1065 was used for a "flow-thru" vehicle for gathering information for a family with "undivided interests". I have the answer I was looking for, finally. Thanks, again.