I'm not quite sure, but if the client was breaking the lease to sell, it seems weird to claim a rental expense that was incurred to STOP renting.  It seems like the opposite of a "rental expense".

*IF* that is the case, I would lean towards reporting it as a selling expense (or possibly part of the improvement expense) rather than a Schedule E expense.

But again, I'm not quite sure and that is just my first inclination.