Q. Will I be able to deduct that 50K expense on my return?
A. Yes
Q. Where would be the appropriate place to do so?
A. Line 20b on Schedule C.
I am of the opinion that you have a business (self employment) and not a rental unit. As such, you file Schedule C (Profit or Loss From Business), not Schedule E (rental). The owner files Schedule E, to report the $50,000 you pay him.
The TurboTax (TT) interview for Self employed business will guide you on where to enter the expense and help you prepare the 1099-Misc you need to issue to the owner.
If using TT online (TTO), you need the Self Employment version. Any version of the download/CD (desktop) version will work.
