From the IRS website: Definition of a Qualified Joint Venture A qualified joint venture is a joint venture that conducts a trade or business where (1) the only members of the joint venture are a married couple who file a joint return, (2) both spouses materially participate in the trade or business, and (3) both spouses elect not to be treated as a partnership. A qualified joint venture, for purposes of this provision, includes only businesses that are owned and operated by spouses as co-owners, and not in the name of a state law entity (including a limited partnership or limited liability company) (See below). Note also that mere joint ownership of property that is not a trade or business does not qualify for the election. The spouses must share the items of income, gain, loss, deduction, and credit in accordance with each spouse's interest in the business. The meaning of “material participation” is the same as under the passive activity loss rules in section 469(h) and the corresponding regulations (see Publication 925, Passive Activity and At-Risk Rules). Note that, except as provided in section 469(c)(7), rental real estate income or loss generally is passive under section 469, even if the material participation rules are satisfied, and filing as a qualified joint venture will not alter the character of passive income or loss. The link to the page this is from, which you will find very useful for your question, is: https://www.irs.gov/businesses/small-businesses-self-employed/election-for-married-couples-unincorporated-businesses

Joint venture is an election for the federal for a married filing joint 1040. How the couple reports (1040 or 1065) will be determined by if this is a separate property or community property state and if this is a husband/wife sole proprietor or an LLC. They may have to file a 1065. In which case, the K-1's produced will be entered like any other income document. If they are able to take the joint venture election, they will file either 2 schedule C or E, with all expenses split equally between the two. For the issue of the 1099 with the incorrect amounts reported, if they can ask the issuer to correct it, that would be best. If not, there are a couple of ways to handle that.