This is from a Champ: lost-earnest-money-deposit-on-a-house-that-i-intend-to-use-as-the-rental-property
If you lost earnest money due to a failed business purchase of a rental home, you may claim the loss. The loss would be considered a capital loss you would write off on your Schedule D.
In the program, go to:
- Federal
- Investments
- Stocks, Mutual Funds, Cryptocurrency, Collectibles, etc.
- description forfeited escrow deposit to buy rental property
- For 'Date Acquired', enter the date the money was placed in escrow.
- For 'Date Sold', select the Alternate Option and choose "Worthless".
- You will choose "Worthless Short Term" if the money was in escrow for less than 1 year.
- You will choose "Worthless Long Term" if the money was in escrow for 1 year or more.
- The cost would be the amount of earnest money you put down on the property.
- The sales price would be $0.
- You did not receive a 1099-B will be the cost basis
Have an amazing day. Evelyn M (CPA 20+ years)
I would love a thumbs up 🙂 + Mark the post that answers your question by clicking on "Mark as Best Answer"
