Mortgage Costs and Organization Expenses

[jskouberdis]

Good morning Community,

I have a question regarding a client of mine.  This client is an LLC that files a 1065 form.  They were in the process of constructing a small strip shopping center on a vacant piece of land that they owned.  They wound up selling the land and construction in progress in 2024 before it was available for rent.  They sold this property at a loss.  Based on my research this would have to be a capital loss since it was not available for rent for at least a year.  My question is where do I write off the organization expenses and mortgage costs that I was capitalizing during the construction period.  From my research these are deductible ordinary expenses upon the payoff of the mortgage and the termination of the business.  Should I open up a form 8825 and put them there or should I deduct them on page one of the 1065?  I do not want to put them as closing costs with the sale of the property because they would then be capital losses.  Has anybody in the community encountered this before.

Many Happy Returns,

John Skouberdis