Very confused on what to do with this. Any input would be appreciated.

I do the bookkeeping for this partnership. The son is now 99% owner and dad is 1%. 

They own a construction business. 

1065 line 1 $412,942

Line 23 income $142,560

Deductions were $270,382 

I have every transaction out of the bank account on excel. 

The credits and debits are all accounted for. 

People give them money up front to build a house, but they might not spend all the money on materials that year. He is saying he's not paying tax on $142,560 because it not his money. 

So, if someone gave him $200,000 to build a house in December and he didn't spend the $175,000 on materials before 12/31/23 what am I supposed to do?

Typically I do deposits vs debits.

Then I would think tax year 2024 since it has more expenses would be less income that year