LeeM, your response re: putting sales tax as Tax & License expense is incorrect.
As SGK stated as well, sales tax should be subtracted from your income. Sales tax collected (and later remitted to the state) are neither income (when collected) nor an expense (when paid to the state). Per IRS publication 334:
Sales tax. State and local sales taxes imposed on the buyer, which you were required to collect and pay over to state or local governments, are not income.
The approach I am taking is checking the box in TurboTax that says "This amount in box 1a is too high or includes some personal transactions" and adjusting it by the amount of sales tax collected. That way I still include the exact amount on the 1099-K, but subtract out an amount that is not income as far as the IRS is concerned.
Source: Just a small business owner doing my taxes, not a CPA. But this is the only approach that makes sense to me and matches up with IRS guidance. Also amazed that there is so little definitive information on this topic out there after hours of research.
