He is a partner in the partnership documents.

They were a Sole Prop before, doing business use of home, and didn't have a separate bank account. I was doing their taxes, and figured the correct amounts based on square footage. I kept telling them they needed to set up separate accounts, and pay their business expenses from a different account, but they actually kept really good records, so it wasn't hard to split everything out correctly. 

Last year, they asked how they could make it so their son could take over the business, and I said it sounded like they needed to incorporate. I told them I wasn't a lawyer, and that they should probably talk to a lawyer or someone who knew more about that than I did. So they did. I told them to make sure they started a new business account under the new business, and make sure they set things up so that the business wasn't paying home expenses. 

The lawyer who set them up did it as a partnership, and they claim he said they could continue using business funds to pay home expenses. The "partnership docs" that this lawyer drew up were terrible. They don't have a % assignment in them. They don't have what each partner is bringing in. Nothing. Fortunately they only paid the guy $5k, which isn't much, but still, for that kind of money he should have given them actual partnership documents. (It's a one-page document that lists the names of the 3 partners, their addresses, and states that they will be in business as the name of the business in perpetuity, with all 3 signatures and dates of signing.) Hell, I know nothing about this, and even I could have done better than that!!!

I set up the home as being rental income to mom and dad, in the amount of the cost of property tax and utilities (mortgage is paid in full) and the % of depreciation, with the expenses being just the %.

Anyway, thanks for the help. Sounds like I should book the son's room and board as "partner draws" in the books, and issue that as income. Thanks!