To avoid IRS scrutiny, I suggest you report the Form 1099-MISC information as it is stated on the form. Then enter a negative adjustment to "Other Income" to back the income out. Then, report the rental income as if it had not been reported on a Form 1099. That way the IRS will match the 1099-MISC form entry on your return with what they received.
You can make that adjusting entry in TurboTax as follows:
1. From the Federal menu in TurboTax find Wages and Income
2. Find Less Common Income
3. Choose Miscellaneous Income, 1099-A, 1099-C
4. Choose Other Reportable Income
5. Enter a description of the adjustment (misreported income?) and the adjustment as a negative number
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