Let's say your LLC is renting an entire building for $20000. The LLC subleases 1/3 of it to random tenants that are not a part of the LLC's business. It receives $4000 in rent from those tenants. I assume this rent has to be on a schedule E in order to avoid self-employment income (since this is passive income anyway). Now, is the LLC still allowed to deduct the full $20000 rent expense on schedule C? Or does it need to split it into thirds, and deduct only 2/3 on schedule C and 1/3 on schedule E as an "expense"?
What about other expenses that are related to the whole building? Let's say your LLC has to pay the water/sewer for the whole building as well. How does this expense get deducted? Split between 2/3 and 1/3 or just deducted on schedule C?
