We received a deposit against an option to purchase on a real estate property in 2018. The sale will close in May of 2019. How to treat the deposit on 2018 tax return.

[Hal_Al · Accepted solution]

It doesn't get reported, at all, on your 2018 tax return. You do not have constructive receipt of the money.

You will report it on your 2019 tax return. If the deal goes thru, it's part of the sale price and will be reported as a capital gain (unless it's the sale of your residence).  If the deal goes sour and you keep the earnest money, it will be reported as ordinary income.