Problem: You have a client, who is purchasing a rental property in 2020 and has hired you to prepare their tax return. One of the areas of discussion for this was the application of costs for the purchase of the rental property. In your discussion of costs to acquire, you and your partner have been discussing the amount of state property taxes paid in the year of acquisition.

The client will pay (according to the proposed closing document), $7,500 in property taxes, and the home was taxed $15,000 for the entire year. The client will buy the home on August 31. The partner is rather busy and has asked you to prepare an internal memo as to the tax treatment and the amount permitted for the deduction in the year of 2020 for taxes paid. Write an internal memo using the following format of the memo. Cite relevant code sections allowing for your calculation to be taken and provide the amount your client will be able to take in the year 2020, so when the preparers of the tax return next year see it, it will be handled properly.

Sbj: Deductibility of Property Taxes under Code Section [Code Section] for the 2020 Tax Year.