topic How Do I Report Proration of Rent Included in Income in a Prior Year in Investors & landlords

How Do I Report Proration of Rent Included in Income in a Prior Year

Bruce354 — Tue, 20 Jan 2026 00:06:14 GMT

Our LLC, a cash basis taxpayer, reported on last year's tax return the annual rent which covered part of last year and part of this year. We sold the property early this year before all of the rent attributable to this year had accrued. The unearned portion of the prepaid rent was allocated/prorated (i.e. debited) against the purchase price paid by the buyer at closing. It seems that we should get a deduction or offset this year against that unearned rent since we included that amount in income last year. How do we claim or report that amount?

Re: How Do I Report Proration of Rent Included in Income in a Prior Year

PatriciaV — Tue, 20 Jan 2026 18:59:38 GMT

Since you already reported the income in a prior year, you would adjust the sale proceeds for the prorated rent. In other words, include the adjustment that was made as part of your selling expenses.

Re: How Do I Report Proration of Rent Included in Income in a Prior Year

Bruce354 — Tue, 20 Jan 2026 21:52:29 GMT

Thank you very much.