Sam, one of your clients, purchased real estate this year. Under the terms of the purchase contract, Sam was required to reimburse the seller for prepaid real estate taxes on the property. Sam wants to know if the reimbursed taxes are deductible in the current year, or must be capitalized into the cost of the real estate. You find Internal Revenue Code Section (IRC) 1012, which governs the cost basis of property. Which of the following treasury regulations related to this section deal with Sams question? a. 1.1012-1. b. 1.1012-2. c. 1.1012-3. d. 1.1014-2.