Subletting a sublet in a sole LLC

[TonyK628]

I started an single member LLC to purchase an aircraft hangar (condo) sublease that is valid for the next 39 years.  The cost of the purchase from the previous subleasee was $60,000.  I have deducted mileage to the hangar from my home once monthly for visual inspection, as well as monthly expenses of electricity and gas, as well as an annual association assessment as on-going expenses.

I further sublet the hangar to a partnership for their airplane and have reported this as rental income for the LLC.

As the value of the sublease the LLC owns on the hangar diminishes with time, how do I report/deduct the $60,000 payment? Is it a single payment or should I divide the $60,000 over 39 years and report $1539 as the lease payment for the year?

Likewise the $60,000 was funded with personal funds and would like to consider it as a loan to the business, am I allowed to repay myself over time and deduct it from the business income? 

[MinhT1]

As your sublease is for 39 years, you can amortize it over 39 years and you will record 1/39 of the amount each year as a business expense under Amortization.

As for charging interest to your LLC, there is no point. If you charge interest, you will have to report this interest income which neutralize the interest expense deducted by yor LLC. Your single-member LLC is a disregarded entity for tax purposes and all its income and expenses are reported on your personal tax return.

[TonyK628]

Can I pay myself the initial investment back over time at 0% interest thereby reducing the net income of the business to $0 annually?

Thank you.

[DianeW777]

No. Even though this is an LLC, it is a single member reporting as though it was an individual.  You are not allowed an expense deduction for paying yourself.  Your net profit each year is your income, i.e., your payment.  It will not stop the taxation of the net profit.

If you set yourself up as an S Corp, you could pay yourself wages, however the costs may be more than the tax difference is worth. You should consult with a firm or company that would provide guidance for best options before making a choice to change your entity.