Your attempt at a work around to this problem is just inaccurate as security deposits held on behalf of the renter is never reported as an expense under any circumstances, just because you move it to a separate account or not changes nothing There is no gray, it's black and white. I see no other way but to ignore the darn 1099-K altogether and report as I always have on Schedule E with no audits to my name and let sheet hit the fan I guess.
I can't seem to get an intelligent answer to this anywhere. The only information I keep getting from the payment platforms is the IRS link to the 1099-K for 2022 which states to report it on Schedule "C". This is for Merchants, Corporations etc.
