"Income not constructively received", 1099-Misc, Accrual-based Payer, cash-based receiver

[EnsomUlve]

I perform work as a contractor, and am issued a 1099-Misc by a company that uses accrual based accounting. I am on cash basis. The company includes the December payment on their 1099-Misc. I do not receive the payment/check, via US mail, until 2nd week of the following month, e.g.., mid-January the following year. As such, I request that my accountant use the 1099 # for Gross Income on Schedule C, and  add that December payment to Schedule C, Expenses as "Income not constructively received in <tax year>".

That said, what do you do the following year when you have to account for the income received in January, e.g., the following year same thing happens, where December payment is again listed as "Income not constructively received in <tax year>", but, how do you account for the income which was received/booked  in January of the current tax year for previously year's December payment (included on previous year's 1099-Misc)?

Can this be entered as a negative expense on Schedule C, Part IV Other Expenses, along with positive expense  for the income not constructively received (December payment), i.e., two line items on Schedule C, Part IV Other Expenses, section, one to account for "income constructively" received in January current tax year (negative #), and the other "income NOT constructively received (current tax year)" (positive #).

This would then always allow my accountant to use the reported 1099-Misc # on Schedule C, Gross Receipts, and account for the inflow in January and expense December payment which will be accounted for the following year. Gross Receipts on Schedule C + two line items, one negative, one positive, would be exactly what is reflected as income for current year on my books/cash-basis.

[Mike9241]

if it's in the mail in December 2021 it's 2021 income.

[EnsomUlve]

No, it's not in the mail in December. Checks are dated 2nd week of January, the following month/year.

Furthermore, being on a cash basis, I do not have to account for the income until it's "constructively received"--in this case mid-January the following tax year.

That said, my question, above, has more to do with accounting for the income on Schedule C the next year. Please refer to my original post above.

[EnsomUlve]

My accountant has stated that if I list my book-based income, which is a very small percentage lower, than what is reported on the 1099-Misc, it likely result in a flagging by the IRS, an associated letter requesting an explanation why my reported income is less than what is reported on the 1099-Misc.

My preference is, and has always been, to list the income and expenses exactly as reflected in my books for the tax year on Schedule C Gross receipts despite the small discrepancy.  On years where my booked income exceeds what is reported via 1099, there is no "mismatch" issue, or potential flag.

That said, I have seen posts on TurboTax , and specifically above in previous replies,  that state you should always list the 1099-Misc # for Gross receipts and add line item(s) to account for the discrepancy as per my original post, e.g., "income not constructively received". Another link here: https://ttlc.intuit.com/community/taxes/discussion/i-use-accrual-client-is-cash-how-to-handle-for-th...

I am just trying to assess what is more accurate/correct, and to understand any implications, e.g., will the IRS automatically flag a return if Schedule C Gross receipts are less than reported income via 1099-Misc, even if the discrepancy is very small, e.g., in my case 1099 Misc is 1.02% larger, a very small discrepancy.

My inclination is to instruct my accountant to show exactly what I booked for income and expenses in the tax year, and if IRS flags it due to small mismatch, provide an explanation, e.g., payer is accrual-based, and I am cash-based and that introduces the discrepancy due to December payment