Where to record expenses for business that owns intellectual property/royalties

We have an LLC that it's only source of income is royalties for some engineering design. We receive a 1099-Misc that shows the royalty we receive from the business that uses our design. Rarely we make a small modification to the design so we have small expenses. We have always claimed the royalties as passive income. But if I enter my expenses (like accounting software or expenses such as supplies needed for modifications) it wants to show having a loss. Can't I just reduce the passive royalty income? That is what an accountant has done in the past but I can't figure out how to enter expenses/deductions in TurboTax Business (Desktop) without it showing as a loss of income (meaning showing up in box 1 of our K-1s) and not just a reduction in royalties. In the accountant's previous year's 1065, he listed the expenses to royalties  on a rental expenses/schedule.