LLC owns vacant land and paid the city $50K which the city used to pay consultants for environmental, traffic, and other studies. This study was part of a larger overall project plan involving several adjacent land owners. Some regional agencies came in, sued the city, and killed the project.
The LLC will now be spending another sum of money with the city for the same purpose. This will be just for their own little development project.
Can the LLC write off the $50K from the first study?
If the LLC's intent is to just get their approvals in order and then sell the property to a developer, what would that write off look like? Capital loss or ordinary loss?