Paypal 1099-K shows all money coming in, including my own crypto plus double-reported things

[godinu1]

Paypal sent me a 1099-k for every penny that landed in my paypal account last year. a) 2 clients sent me 1099-NEC, and they also paid me through Paypal, so right away, I'm not sure which way I should report money from the NEC clients. b) I bought and sold crypto numerous times through paypal, so I have money coming back in that's actually mine from my crypto wallet showing as part of my income on this Paypal 1099-k. I am at a loss on how to deal with any of this. 

As an example: 

let's say the 1099-k shows 40,000 in income; of some of that income:

2,500 of that is from income reported over 2 different 1099-NECs, so that's duplicate reporting. Furthermore, Paypal took a cut of that money so I'm not sure how to report the Paypal fees here.

8,000+ is crypto that I sent to myself from a crypto wallet. (I actually spent more than that on crypto so technically I lost money, it's not income)

about 23,000 of the 1099-k is money i actually earned from a client.

a smaller amount is from friends sending money

how on earth do I reconcile any of this? my "income" is nowhere near the 40,000 reported on the 1099-k, and this is before I do my usual business deductions, etc. (I'm using a Windows version of TurboTax)

[jtax]

[Edit, sorry I didn't notice this was six months old. I am leaving my response because it might be helpful to others in a similar situation.]

The double-counting isn't that big a deal. Others may have different opinions, but I would suggest putting in the total amount reported on the various 1099s (for business income only not crypto) when TT asks you for income reported on 1099's on Schedule C.

Then add an "other deduction" on Schedule to remove the double-counting with a description something like "removing the same income reported both on a 1099-K and 1099-NEC."

The cypto is different. That is a capital asset.  If your basis is not reported to the IRS (on a 1099-B or  1099-DA), you need to report that gain or loss using your own records for your sales proceeds minus your cost basis. You cost basis is what you paid for the crypto.  Fees upon purchase add to your basis (purchase price + fees) and upon sale fees of the sale are usually not included the 1099 proceeds. If they are just increase your basis to account for that.

It is not clean that a 1099-k could represent both business income and crypto proceeds. I don't love that the 1099-k amount does not appear in a single place on the 1040, but what can you do. In future years the 1099-DA will remove this issue.

For now, just have good records and be ready to explain if the IRS asks for clarification. As long as the gross 1099 numbers appear somewhere on your return and you have a clear description (with whatever backup statements/documentation you have) of the numbers you used for your basis (or Schedule C "other deductions"), I think you will be fine.