Get your taxes done using TurboTax

No, cost of goods sold refers to physical goods held in inventory.  I know you didn't actually pay the commissions, but the idea is that this is an expense that was included in the 1099-misc.  Say the 1099-misc shows $20,000 but you only received $15,000.  You would report $20,000 as your gross income, but deduct the $5,000 as Commissions and Fees.