Expense reporting on Form 1065 vs Form 8825

[sumluck]

An LLC holds several rental properties, should the state LLC fees and franchise tax expense be allocated among properties on Form 8825? Or report it as ordinary expense on page 1 of Form 1065?  Same question applies to accounting and professional fees for preparing LLC tax return.

[PhoebeRoberts]

I've seen it done both ways. Matter of personal preference.

[sumluck]

Thank you for your reply.  Expenses reported on page 1 of 1065 is considered ordinary expense while reporting on Form 8825 is considered as Net rental real estate income/expense.  Ordinary income/expense maybe treated as self-employment income while rental income/expense may not. 

[taxgirlshannon]

If you are referring to CA franchise tax expense it is not deductible on the state return.  So it is easiest to track by entering directly on the 1065.

[sumluck]

There's an input screen in Lacerte where you can input amount of tax expense for State purpose.  So that's not my concern.  My biggest question is on self-employment income treatment.  For a general manager/partner, ordinary income/expense is considered as Self-employment income on k-1 while net rental real estate income/expense is not.

[Tpollaro]

Regarding the input screen in Lacerte where you can input amount of tax expense for State purposes vs Federal Form 8825, I don't see that it's picking up the adjustment.  This is related to the Business Alternative pass through tax that is deductible on fed 8825 but not for NJ state partnership rental real estate activities.  Any ideas how to make this work?