@Aluke8312
@Anonymous86
I'm not sure this is the best experience overall, but it is what you have to do to be able to e-file. As @BrittanyS wrote, you enter the 1099-K as miscellaneous income, then enter a second item of miscellaneous income in a negative amount to offset the 1099-K, then enter your actual gambling winnings and losses in the usual way.
If you don't include the 1099-K on your return, you will definitely get an assessment letter from the IRS. If you include it, even if you are zeroing it out, you are acknowledging the form and indicating that you are reporting the income elsewhere, so you only might get a letter asking for more details. Keep your gambling and PayPal records for at least 3 years in case of audit.
