When they first came out with the 1099-K there was a reconciliation that was supposed to be done (on the tax return) but nobody liked it so they scrapped it in favor of just sending notices.  <shrug>  Not quite sure why, they could have simply made the instructions "complete this section if your 1099-K amount is greater than your gross sales".  But they don't ask me.

I'm personally averse to tinkering with the accounting in order to fool the IRS computer into ignorance.  But I'm in VA where the gross receipts number gets reported to the locality for cross-reference with the city/county business license tax.  So reporting income that's not really income might get you a letter from the city/county government, pick your poison.

How hard would it be to do a 1099-K reconciliation?  Then attach it as a statement.  It's not likely to get read by anyone but at least it makes for an easy response to the impending IRS inquiry.  "As shown on the attachment: 1099-K amount - tips - sales tax = x + cash sales = 1120S line 1."

I've heard other people put them in as Returns and Allowances so maybe that's an option to consider.

Rick