The property was purchased on 03/19/18. The buyer received a credit for the second installment of 2017 taxes and for 78 days of 2018. Usually the buyer would pay the taxes for the second installment of 2017 around August or September of 2018. After closing, the County Assessor's Office reduced taxes on this property so there is no liability until 2019 and the amount due in 2019 will be much smaller than the credit.  Should I show this property tax credit as liability as of 12/31/18 and just reduce this liability when taxes are paid in 2019? The buyer is a corporation.

I've always just carried it forward to offset future taxes paid.

Thank you

Reduction in basis.

Since those taxes are operating activity, pick the credit up as income on your rental schedule if there are no expense amount to reduce subsequent payment. Either way, current impact.

@pkellycpa   Please stop reviving threads from two or three years ago.  They're not just water under the bridge, they've been through the treatment plant and flushed back down into the sewers.  

But the sludge has not been purified.