tax treatment for drilling a dry water well for a satellite business office

[dapa1]

I am a self-employed sole proprietor with a successful 30-year engineering business.  A significant part of my income is generated December-May. Living in Alaska, I wanted to set up a satellite office in warmer climates during that time frame.  In early 2022, I made an offer on some raw land, contingent on drilling a successful water well, that I could build a modest 1500 SF structure with an office.  My offer was accepted.  $12,000 later, in September 2022, my business drilled a dry water well.  I am continuing my property search in 2023.

If appropriate, where in TT can I take this business expense?  Schedule C, Miscellaneous Expenses? 

[Anonymous_]

See https://www.irs.gov/publications/p535

You may be able to deduction this expense as a capital loss. 

I will page @Critter-3 for input.

[dapa1]

Thanks for this response.  It is a complicated issue because this dry well cost may in the future have to be allocated between business use and personal use of the property.