Business & farm

I'm not sure how accurate that audit risk feature really is but I do know that if your taxable income is properly stated you're pretty much bullet-proof and there's really not anything the IRS can do to you.

There's always the option of simply omitting the 1099-MISC all together on your own income tax return.  If the IRS picks up on the missing 1099-MISC then their first course of action should be one of those computer-generated "letters" alerting you to this and suggesting an amount that the IRS figure should be added to your taxes.  You would hope that a well-written letter stating the facts of the situation and showing that the dollars were correctly reported on your S-Corp income tax return and in turn "passed through" to you to be included on your own Form 1040 would settle the matter.  But one never knows.