Owner Occupied Commercial Building - Partial Lease Reporting

[LaundryKing]

I own a building with two relatively equal spaces.  One portion is used by my laundromat and the other portion is leased as a restaurant.  The lease to the restaurant accounts for about 25% of the total income from the property.  Since getting flagged for audit due to my operating numbers not being consistent with a leased laundromat operation, I have been reporting rent paid to myself and rent collected from the restaurant along with all the building expenses on a Schedule E.  Can I just report everything on my Schedule C?  The main reason for wanting to do this is to claim the income as active income for SEP contribution purposes.  
Thank you.

[tagteam]

You need guidance from a tax professional.

Re renting the property to a third party, the proper reporting for that situation would be on Schedule E. Schedule C reporting is for real estate dealers and owners of residential real estate who provide significant services to their renters.

As an aside, if you are a sole proprietor and are the sole owner of the building, you really should not be reporting rental income on your return as you cannot rent property you own from yourself. 

[LaundryKing]

Thank you.  I had conflicting responses from tax professionals.  Just trying to get one more data point. 

[nstillwell]

@tagteam, in the situation above, if part of the building is being used for my personal business, and part is actively rented out, I understand only the expenses directly related to the rented portion are deductible.  But  how are the overall costs allocated?  (by percentage of use?), i.e. mortgage interest and more confusingly depreciation?

[tagteam]

A reasonable method would be percentage of use.