How should a real estate professional write off forfeited earnest money?

[jaschicago]

I lost my earnest money deposit when a non-residential rental property deal fell through. I'm a real estate professional and this was part of my normal course of business. I walked away after issues came up in due diligence. Per the contract, the seller kept the earnest money deposit ($10,000) as liquidated damages. I cannot figure out how to report this. 

[SweetieJean · Accepted solution]

 If you're buying business property and you forfeit your earnest deposit, you can write that off as a capital loss, provided the property is all business. 

http://smallbusiness.chron.com/tax-deduction-related-forfeited-earnest-money-76488.html

[jaschicago]

Thank you so much. Very helpful!