USA Cancelling a purchase contract

[Kazem Langaroodi]

There is a contract between a non-profit organization and a person, based on that, the non-profit buys the copyright of a book from an author. While still the contract is in process, the non-profit pays him, and reports the payment amount as the expenses and pay tax for it. On the other hand, the author doesn't report it as income and doesn't pay for it since after signing the contract, he wants to void the contract and stars discussion about it with the non-profit. And finally, after 2 years the contract is voided.

How should the non-profit deal with the financial part he has done? (reported expense and paid tax for a cancelled contract after two years?)

 

[kirby]

When contract was voided, did nonprofit get all of its money back?

 

[Kazem Langaroodi]

After two years cancelled, and the non profit got all the money back after two years, so the person had the money for two years. (actually he was paid in the process of a contract that never became valid)