Business Expenses

Yes. Since you already determined your final gain or loss in an earlier year, when you sold the lot, these expenses essentially become capital losses; short term, as long as they were not used on the final business return. This is treated like a business bad debt which is why it would be considered short term.

• IRS Publication 535 (See Business Bad Debt section)

Report this on Schedule D using the steps below.

1. Open your TurboTax account > Select the Personal tab then Personal Income > I'll choose what I want to work on (Desktop version) or Wages and Income (Online version)
2. Scroll to Investment Income > Select Stocks, Mutual Funds, Bonds, Other > Start or Update
3. Add or Edit your sale that is NOT reported on a Form 1099-B > Select to enter a business bad debt 
4. Enter the Total Proceeds zero > Cost Basis (total amount of business expense)
5. Enter the holding period - short term
6. Continue to finish your sale/bad debt.