I did not 1099 a contractor. Can I still write off the expense. We are looking at around $35,000.

So, You paid your IC, but did not send the IC a Form 1099 for the payments. You can get audited, the IRS requests verification of the labor expense, and you provide the auditor with copies of your checks verifying the payment. But the IRS auditor says you cannot deduct an expense if you did not send out Form 1099. The IC labor can be a pretty significant amount, maybe your largest expense. The tax you would owe if the IC labor expense is disallowed would be staggering.
But you paid the expense, and can prove it. Section 162 of the IRC allows a deduction for ordinary and necessary business expenses that are paid or incurred during a year. In the case of contractor labor, you would need to show the IRS auditor that the work the contractor performed was done in the ordinary course of your business and was necessary to it, and then prove that you paid the contractor. Nothing in Section 162 or Cohan requires a Form 1099 to be issued for a contractor labor expense to be deducted. You just need to prove you paid the expense in the operation of your business. Proof can be direct (a check) or indirect (recreating what you did and who you paid);r emember, proving an expense under tax code Section 162 does not require the sending of a Form 1099.
Section 6041 of the IRC requires a business that pays more than $600 to a subconcrator to send the IRS a Form 1099-MISC reporting the amount paid. Under Section 6721 of the Internal Revenue Code, the IRS can charge you $100 for every person for whom you did not send a Form 1099. You have rights if you disagree with an IRS auditor. And an IRS auditor not allowing a business expense that can be verified because a 1099 was not issued is a definite source of disagreement.
Most every IRS decision comes with a legal right to appeal. That includes decisions of IRS auditors.Your rights include requesting an administrative hearing with an IRS appeals officer, who is separate from audit and will take a fresh and impartial view of your case. Most IRS appeals officers understand the difference between proving an expense and not issuing Form 1099 and that they are not interrelated.
You also have the right to file a petition to U.S. Tax Court and have an independent judge ? who is not affiliated with the IRS in any way ? review your case. The IRS would have to prove that you did not pay your IC. Without more, not issuing the 1099 is not a defense for the IRS. It is the auditor?s opinion, an opinion which is subject to appeal, trial and being overturned. If you issued a Form 1099 to the IC but have no records to prove you paid the expenses, the IRS would not allow you the expense. The Form 1099 does not make the expense deductible, and does not make it nondeductible. And remember, verification can be direct evidence your checks, or indirect under the Cohan rule , I mean recreating the expense from reliable information