Is the management company leasing the property from the owner? Or, at least, is there a management contract in place? Is there any sort of formalized agreement, or is this all handshake?

Is it a partnership or an LLC filing as a partnership?

qbteachmt:

I don't believe so, but they have a business attorney.  Is that a requirement, or just a recommended practice?  I will suggest that they consult him.

It is an LLC filing as a partnership.

"Is that a requirement,"

Your partnership is not owning the property, not leasing the property, but is managing the property. There should be a management contract (or if they want the partnership to be the operator, a lease). Otherwise, as managers, they pass all expenses to the owner and all income to the owner, and they charge the owner a management fee. And they send a 1099-Misc for Rent box 1 for the gross income.

This is asset/liability accounting, not expense. Think of the expenses as Pass Through, not as expense. The rental income isn't the partnership income, either. The management fees is how the partnership has income.

They don't seem to be getting good guidance on this.