Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.
Good morning. Unfortunately, as a sole proprietorship, you are a cash basis taxpayer. As a result, you will have to report the operations of your sole proprietorship based on your cash received for 2012 and your deductible expenses actually paid in 2012. The IRS won't allow you to take expenses paid in 2013 and apply them against 2012 income.
This is the part of my job I don't like...when the law
is not in favor of my customer. I wish I could tell you that you would be allowed to do what you proposed, but, I can only provide you information based on the law so that you can act on the best available information to you. I wish I had better news, but can only hope you recognize and understand my predicament and don't shoot the messenger. I'm sorry!
Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!