Vanessa A is right on the money. I originally thought the right approach was to enter the 1099-K and adjust it, but I did not realize that the information you enter into Turbotax regarding the 1099-K only shows up in an "informational" worksheet that is not even transmitted to the IRS (it also flows to Schedule C but it's just aggregated with all other business income). The IRS actually has no way to tell whether the income that ends up on Schedule C was from a 1099-K, or was just amounts that you entered yourself from your records. Since my records are far more accurate and complete than the 1099-K, my solution this year was to ignore the 1099-K and enter all data from my business records. That makes this whole thing much easier!
Presumably, what the IRS is looking for with the 1099-K is people who get one (say, from selling stuff at craft fairs or on eBay) and don't enter it onto their taxes at all. If you're operating a legitimate business with accurate business records and P&L, there's no need to worry about it.
