Rev. Rul. 61-7

Pursuant to the authority of section 7805(b) of the Internal Revenue Code of 1954, Revenue Ruling 60-133, C.B. 1960-1, 187, which states the position that an amendment to state law will not give rise to a deduction of more than twelve months' property taxes in any one taxable year by accrual-method taxpayers, is modified so that it will not be applied to disallow deductions for more than twelve months' taxes to such taxpayers on the ground that a change, prior to September 14, 1960, in local law of the accrual event from January 1 to December 31 does not give rise to an allowable deduction of more than twelve months' taxes in one taxable year. (September 14, 1960, is the date of approval of Public Law 86-781, C.B. 1960-2, 720, which added subsection (d) to section 461 of the Code.)

Taxpayers, however, who accrue on their books one-twelfth of the property or other tax each month over the period of time covered by the assessment are deemed to be on the ratable accrual method and will not be permitted a deduction of more than twelve months' taxes in their calendar year. See Rev. Rul. 57-539, C.B. 1957-2, 303.

Similarly, taxpayers otherwise on the accrual method who account for taxes on the cash method will be permitted a deduction only for taxes actually paid during their calendar year. See Rev. Rul. 59-285, C.B. 1959-2, 458.

It is emphasized, however, that the Service will not require such taxpayers to deduct more than twelve months' taxes for their calendar-year period.

¹ Based on Technical Information Release 272, dated November 25, 1960.