Taxiowa,

From my research when a mortgage gets paid off you can deduct the unamortized costs immediately.  And also when a business ceases if you were amortizing organization expenses they can be written off in full.

The problem with putting them on a rental schedule is you have the passive loss limitations and also this never materialized into a rental.  These expenses that constitute the organization expenses and mortgage costs are all ordinary expenses that are no longer in an active business.  That is why I would favor either putting them on page1 of the 1065 or on the 4797 as an ordinary loss since they would have been written off as ordinary expenses over time if the business continued.  And the mortgage costs would have been written off after mortgage was paid off.

I guess this is a gray area not seen very often as you mentioned and every one has their take on it.

Thanks for responding