Yes, you report all income actually received in 2017 on your tax return even if the rent paid in December is for January, 2018. For Schedule E, Part 1, line 2 this would be considered "Commercial" rental because it is not a residential space for family living, but an office space for business activity.
You can enter your office rental activity by using the steps below.
- Sign into your TurboTax account (online or desktop)
- In the search box, upper right > Search for rentals > Jump to rentals
- Continue to edit or update the property
- Click the images attached to enlarge and view for assistance.
Yes, the rent paid to the owner is put onto schedule C. The sublessee rent goes onto schedule E.
Hope this helps!!