I do not want to presume - you did not pay any taxes, including FICA TAXES on the 2012 1099-MISC?
You simply redeemed lawful money on all checks relating to the total $79073? And this automatically includes not only federal income taxes but also social security and medicare taxes as well?
If this is the case, may I ask how did you back out the L56 - Self Employment taxes out of the 1040?