If you bought the property you could add the expenses to your basis and depreciate. Because you didn't buy the property the fees are miscellaneous itemized deductions on SCH A and are not deductible after tax reform.

i disagree. I believe IRC section 1234A is applicable

Gain or loss attributable to the cancellation, lapse, expiration, or other termination of—
(1)a right or obligation (other than a securities futures contract, as defined in section 1234B) with respect to property which is (or on acquisition would be) a capital asset in the hands of the taxpayer, or
(2)a section 1256 contract (as defined in section 1256) not described in paragraph (1) which is a capital asset in the hands of the taxpayer,
shall be treated as gain or loss from the sale of a capital asset. The preceding sentence shall not apply to the retirement of any debt instrument (whether or not through a trust or other participation arrangement).

Thanks Mike -- in this case which form I should use? It happened in 2020 I guess I need to amend my income tax return.

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@Mike9241 wrote:

i disagree. I believe IRC section 1234A is applicable

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I disagree with your disagreement. There was no sale or exchange and more importantly there was no forfeiture of a deposit of any kind for failure to exercise an option....only various professional fees were incurred.

Even if you make a deposit of thousands and lose that because you don't go through with the purchase, you can't deduct that loss.

Even if you make a deposit of thousands and lose that because you don't go through with the purchase, you can't deduct that loss.

Whatever.....the fact remains that the fees expended by @superbean2008 are NOT deductible.