>>100 per month is recognized as revenue. The balance is held in something similar to escrow.
>
>If I got this right, $100 per month is what you need to report to IRS, regardless of whether you got all $1200 at once. If you report quarterly, you should say $300 each quarter and simply pretend that the rest is hanging beyond your reach. Correct?

That is correct for a business on an accrual (not cash) accounting basis if they believe the revenue is a year's worth of services.

(FWIW, there are ways around that by determining the fees are not really for a year of service.)