Here is the easy way to fix this ... you will enter the income on the 1120S like normal.
Then in the personal return you will also enter it on the Sch C BUT you will also enter the same amount as an expense ... in the misc expenses section make your own category called "1099 income reported on form 1120S".
This way the income goes to the correct place AND the IRS sees the income where it is expected. Then make sure that person is given a W-9 form so that they only write checks to that entity so you don't have a repeat of this situation.
