I spoke with IRS Tax Law Department today. They just read the regulation exactly as it is written and do not give any guidance.
The best I can understand is that I should have not entered the 1099K into the program the way I entered any of the other 1099's.
I deleted the 1099K entry completely and just reported all of the income on Form's 8949 with an entry for each individual item as "1099K Collectable Toys-1164". The last four numbers are a numerical transaction Sales Record number assigned by eBay for each individual sale.
My total amount works out to the 1099K total.
I will have to wait to see if I will be audited.
