I do have a thought... report the interest income on Sch C - Line 6 as you should, as that is how it is being reported to the IRS on the 1099-INT and probably where they will be looking for it, VS a "note to self" to explain you put it on Sch B - if (when) it is questioned. Now, hear me out, assuming the Sch C is profit, and you are subject to 15.3% SE tax ... well Sch C Line 23 is "Taxes Expense" So, 1099-INT amount X 15.3% Tax Expense deduction would windup you're paying income tax on the interest, but not SE Tax, and would be a better argument to IRS if questioned. I know, maybe I shouldn't be thinking out loud here. Please, be gentle. That is what I do, and have never been called out on it by the IRS.
