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Sole Proprietor LLC also an owner in a Partnership

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    Sole Proprietor LLC also an owner in a Partnership

    I have a new client that has a Sole Proprietorship. During the year he and his wife formed a Partnership that purchased commercial property. His sole proprietorship uses the commercial property for the business. He has been making payments from his sole proprietorship to the Partnership and terms those payments as Rent. The Partnership has the mortgage in the Partnership name. My question is are those payments from the Sole Proprietorship to the Partnership able to be treated as 100% deductible as rent under the Sole Proprietorship?
    I know if there is a sole proprietorship llc and another sole proprietorship llc owned by the same person the "rent" is not deductible. The interest on the mortgage would be.
    Thank you

    #2
    Originally posted by linea View Post
    I have a new client that has a Sole Proprietorship. During the year he and his wife formed a Partnership that purchased commercial property. His sole proprietorship uses the commercial property for the business. He has been making payments from his sole proprietorship to the Partnership and terms those payments as Rent. The Partnership has the mortgage in the Partnership name. My question is are those payments from the Sole Proprietorship to the Partnership able to be treated as 100% deductible as rent under the Sole Proprietorship?
    I know if there is a sole proprietorship llc and another sole proprietorship llc owned by the same person the "rent" is not deductible. The interest on the mortgage would be.
    Thank you
    Sounds like a "self rental".

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