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Subject:  Re: commercial real estate: "earnest money& Date:  3/19/2000  8:50 AM
Author:  hghcpa Number:  32108 of 127753

I am a partner in a newly formed commercial real estate partnership (very small business). Can anyone tell me if the "earnest money" deposit for a commercial real estate purchase is a deductible expense ? I am preparing a partnership Form 1065 for 1999 and this is a sticking point. Thank you.

No - it would be listed as a "other asset" on the balance sheet of the Pship.

If the sale is consummated the deposit would roll into the cost basis of the property purchased.

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