Vacant Rental Sold Not held out for rent during sale period

[Paul True]

So I decide to sell a rental property within a LLC. for which I am manager. It was listed for sale while occupied but then the renter moved out. Shortly after the property sells. Now I discover seemingly bizarre IRS reg that apparently requires it to be held out for rent during sale in order to deduct rental expenses.

 "Vacant while listed for sale. If you sell property you held for rental purposes, you can deduct the ordinary and necessary expenses for managing, conserving, or maintaining the property until it is sold. If the property is not held out and available for rent while listed for sale, the expenses are not deductible rental expenses."

Why would anyone rent or hold out for rent a property that could sell at any time. It would complicate showing not to mention run a renter ragged? 

Oh well it happened. I sold the house with no intention to rent following the former tenants departure. So what do I do with the expenses during that period? Do I capitalize them? Pass them through to Sched. A? Lose them? What about Taxes and Insurance? Do I have to allocate them proportionally to rental and non-in service period? 

I have invested in real estate for many years, but the more I read IRS code the less I enjoy this. I gotta be missing something. Perhaps someone would be kind enough to bring some sanity. 

Thanks.

[Dave Toelkes]

Not quite clear on what you are asking.  During the time your property was tenant occupied, it was a rental and all rental expenses are deductible on Schedule E.  Once your tenant vacated the property, the property was taken out of service as a rental and held exclusively for sale.  Consequently, you stop depreciation in the month the tenant vacated.  Any expenses you incurred during this sale period are either capitalized or accrued as selling expenses, but both reduce the taxable gain on the sale.  

I don't see a problem here.  What am I missing?