I attempted to purchase a rental property in Europe but had to abandon the transaction after I was unable to secure financing (banks unexpectedly tightened rules for expats). The seller claimed I didn't act in good faith and asked for my deposit and punitive damages. I was advised to defend myself as such demands are seemingly opportunistic & abusive. An on-going lawsuit will eventually settle the dispute, with the possibility of either party receiving compensation.
How should I account for the attorney fees I already paid in 2021? Can I immediately claim a business capital loss or should I wait for the lawsuit to conclude? If the latter, should I then capitalize the operation's net outcome (legal fees + potential capital losses + potential damages paid - potential damages received)?
Thanks for your help 🙏
