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Only friend and client know what really happened, and were I you I'd pass along the information and then butt out of it.

Well said!

While I am confident that my friend did indeed receive the check in 2004, this client is her largest and best client and she does NOT wish to get into a he said she said with the IRS over this and upset the client.

It turns out that since her income this year (2003) is much more than last year, she can also contribute much more to her SEP-IRA! I had forgotten about that deduction! So if she maxes it out she will just make it under the wire for ROTH elegibilty ($95,000 MAGI for $3000 contribution) and ROTH conversion ($100,000 I believe). Her $3000 in carryover losses provide an extra cushion for my back-of-the-envelope calculations.

If this would have forced her to have to undo her conversion, she would have insisted the client issue a new 1099 or at least file with an explaination.

Thanks all, for your help!


P.S. It turns out that for december she bills on december 23rd, since she does no work over the holidays, so Miss Clio did not need to get involved. It is also possible, and not unlikely, that the client wrote, sealed and mailed the check on December 31st, but it didn't go into the mail until Friday, Jan 2nd, and could reasonably have just gotten to my friend just yesterday.

P.P.S. Now that's an interesting situation. When does a business get to expense a payment? The day the check is written? Mailed? Couldn't it be possible in this case that BOTH sides are correct? Check was mailed in december, and received in January, so one side can expense it in 2003, and the other side account for it in 2004? Which side gets to decide?
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