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sublease rents on sched E and Rent expense on sched C

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      04-15-2009, 05:15 AM
I have spent a good portion of the day trying to figure out the true answer to this only so far getting various opinions even from the IRS who was pretty useless. I saw a similar post but no official answers.

I have a company (LLC) we sublease space out to other renters for other rooms in the office space. Our previous CPA took the rental income, and put it on Schedule E as rental income. He took the amount we paid for rent (one check per month by our company to the owner for the whole place) as the business rent expense on Schedule C. No expense on E and NO rent income on C. If you think about it .. it can make sense they are not entirely related. One is rent income as reported. The other is a company rent expense that exists if we sublet or not... is this legitimate? has anyone seen this type of treatment? I understand the immediate answer would be to relate one to the other and take the expense where you took the rent... however is there an expressed reason it can not be done this way? Our previous CPA seemed very sure that there was nothing that said you couldn't.

thanks for all that could help!

Last edited by cosmicflux; 04-15-2009 at 05:20 AM.. Reason: spelling
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