1099 misc is greater than income actually received

I assume the company will not correct the form?

Is the 900 a kickback to the referring firm? If so, on schedule C call it a fee or commission, paid directly to the referring firm.

Or on schedule C call it Returns/allowances (See the schedule). And save all bank deposit records and copies of all those checks to be able to show how the reciepts are less than the 1099 amount.

I think it is a timing issue, not the nature of the income/receipt. The payer booked it as a 2010 expense because that's when they issued the check, while the recipient received the check in 2011 and doesn't want to recognize the income in 2010.

There have been a number of exhaustive discussions on that very topic in this newsgroup, you can search the archives at groups.google.com. Look for "constructive receipt" for starters. For example, a lengthy thread in Jan 2009 was titled "constructive receipt" and produced many comments and much food for thought.

As a practical matter, you may well get an IRS computer-generated letter if you report less than the amount of the 1099-MISC on Schedule C. Your written explanation may suffice to make the letters stop coming, but YMMV.

Thanks Mark. I flew right over the date.

"Bobster" wrote

What I would do is show the 1099 amount in full and deduct the revenue received in 2011 as an expense called "Revenue received in 2011". That should result in a correct return and no IRS notice. Just be sure that in

2011 you properly account for those revenues.

That answers my question. I don't want to get the IRS interested so maybe so maybe the smartest course of action is to just report the income that is reported on the 1099 and pay the tax. Of course, her business income in

2011 will be less by $900. I'll also search "constructive receipt". Thanks for your response.

...And make certain that the "cash basis" box on Schedule C is checked.

Note: As the check was dated December 31, you need to find out if it was available to you by ANY means on that day. If not, there won't be constructive receipt.

I think it is any reasonable means. If you can get your check on Dec/

31 but have to travel too much so that it would be impractical to do so, like driving 2+ hours, flying, etc then no constructive receipt.

Snipped everything -

The OP should check the postmark date on the envelope the check arrived in. THAT will tell him when it was taken to the post office. Mail gets postmarked at the post office that processes the OUTGOING mail. So the postmark date will give some insight into when it was actually mailed.

In our office we make a habit of scanning in the envelopes, as well as the notices, that come from the taxing authorities.

Gene E. Utterback, EA, RFC, ABA

What if it would have been available, and the office with it was nearby, but nobody informed the taxpayer?

Seth

This is the constructive receipt conundrum that comes up every so often. I think there is no constructive receipt in your example, but then again I could be wrong.