My friend is in an interesting situation. He paid in advance to a worker in December, but it doesn't look like the worker will finish the job. The worker is willing to refund the money, but in January. That puts my friend in dilemma - he wanted to write this off as business expense for 2012. Is it okay to write this as business expense for year 2012 and show it as income for year 2013? How do refunds involving multiple financial years really work?
He asked the worker if he'll be showing this as his income for year 2012? He was like "No! I'm going to refund it anyway in 2013!".
The friend hasn't incorporated yet or anything.