According to IRS publication 530, any deposits forfeited during a real estate transaction are nondeductible.
"Nondeductible payments.
You can’t deduct any of the following items.
Insurance, including fire and comprehensive coverage, mortgage insurance, and title insurance.
Wages you pay for domestic help.
Depreciation.
The cost of utilities, such as gas, electricity, or water.
Most settlement costs. See Settlement or closing costs under Cost as Basis, later, for more information.
Forfeited deposits, down payments, or earnest money."
