His way of thinking is really the only way you can do it now.  You are only going to claim the money once as income.  The original amount you received in Jan, 11 would be your true income.  What was paid by the elevator is going to have to show up somewhere because they listed it on your 1099, so you simply list an offsetting deduction for the amount of $170xxx.

I've done various stuff like that for years.  As long as you have some documentation that that is where the money went, you won't have any problems. 

Years ago, I had a different accountant and she tried to list some income from a similar situation twice and I had one heck of a time convincing her that I only actually got the money once.

Seriously, all you need is a bookkeeping entry to show the money ($170,xxx) on both sides of the ledger.