Not an accountant, but just my 2c. In your example, you mentioned that you took on a task worth 200$, but you only finished a single milestone worth 50$. Meaning that you got your work's worth of 50$, and the 150$ is for the work that was never (or at least shouldn't have been) started in the first place. I would personally just declare that 50$ as income, and forget about the 150$.
Again, not an accountant, but it just wouldn't make sense for any goverment institution to leave a loop hole this big. I dare say nearly everyone would abuse it to hell if it worked like this. Very interested in what the actual accountants think about this; the google searches aren't particularly easy to understand.