Leaderboard

I would do the work around you suggested, entering the amount on Schedule C and then deducting it with an explanation on p. 2. Yes, of course, your client can ask the issuer to amend the 1099-K, and that would have been a really great thing to do seven months ago. I would do what is expedient for me, and call it a day, as my friend Abby says. Some would say just don't address it on the personal return, let the client get the letter, have a light stroke, (or get mad at you - they do that) and then charge client to explain to IRS what happened. I really can't charge enough to like fixing these things, and the "fix" is going to be saying exactly what you're saying now. Additionally, three weeks after you respond to the letter, the client is going to trot back in there with the letter that says, "We got [one of these six things] from you, and we need two months to let it lay around but we'll get back to you. That's your fault, too. /s

But it's not a solvable problem in the catch-22 situations.

This isn't about getting more bang for your buck because you have higher end software. Drake is certainly more affordable than either ATX or ProSystem, and it generally does the calculation too, but this is a recognized problem for software in this specific situation. Abby Normal's post above perfectly describes what happens sometimes when applying the iterative calculation where he said it's "the catch-22 where deducting SEHI qualifies you for a PTC, but then the PTC lowers the SEHI so much that it disqualifies you for the PTC."