Your client only does work for folks that send him a 1099?

No, why?

However, this 1099-MISC is a huge amount compared to his other fees. 

"No, why?"

Because you seem to be focused on the 1099s.  The 1099s in the software don't get transmitted to the IRS so there is no reason to use them.  Just enter what the actual receipts were for the year on schedule C.  You can always attach a note to the return stating the reason for the income to be less than the 1099s but the IRS isn't going to read it.  Just leave a note in the file in the event the client gets a notice somewhere down the road about the timing issue.

Thanks, IronMan.

I usually don't enter 1099s as long as the revenue is greater than 1099s.

In this case, the 1099s are much greater than the revenue being reported on Sch C. I just don't want any red flags when the IRS matches 1099s to the gross receipts reported on Sch C. 

Any idea why 1099-MISC box 10 wants us to enter the taxable amount after we have entered the amount of the 1099-MISC?

Thanks.

Never use them so I don't know why, but what happens if you enter the amount in box 10 and what happens if you don't?

Did he really not receive until 2025?

Or did he just not deposit it until 2025?

If I enter the proceeds in box 10 then the gross receipts is reported on line 1c Schedule C.

If I don't enter the 1099 gross receipts then it isn't reported on line 1c Schedule C.

I have clients who received letters from the IRS stating that there is unreported income since the 1099s don't match the amount reported as gross receipts.

I'm just trying to make it clear so that the client doesn't get the dreaded letter.

He says he didn't receive it until 2025. The 1099 info shows that the payment was sent toward the end of 2024 so it appears to be reasonable that the TP didn't receive it until January 2025.

There are still some lawyers filing Schedule C?  How quaint.  

Presumably IRS has read its own instructions to Box 10, Form 1099-MISC:

"Box 10. Shows gross proceeds paid to an attorney in connection with legal services. Report only the taxable part as income on your return."

So no, this is not like when IRS matches 1099-NEC contractor income with Schedule C gross receipts.  Just put that out of your head. 

Typically, the check is issued to both the attorney and the client; both of them have to sign it; it gets deposited into the attorney's trust account; and separate checks are then written from the trust account for the attorney (for fees, and reimbursement of costs) and to the client.  That may be why a check issued in 2024 didn't show up as income until 2025.  

If the "costs" were advanced in prior years, they should not have been deducted then, because they are just advances to be reimbursed.  Is that how you are handling them?  

Yes.

Thanks for your help.

"There are still some lawyers filing Schedule C?  How quaint."

@BobKamman I have one lawyer that operates as a SMLLC that does that. He made the decision. No employees, works from home, etc.