A: Great! You are to report only Taxable Income and it depends entirely upon your right to be heard, and the law. Three possibilities come to mind:
1- Fill out Schedule C like your online store was a business, with the profit on Line 12 Business Income, then include that same profit (as a negative) on Line 21
2- Put the entire $17k on Line 12 and also include it (as a negative) on Line 21.
3- Ignore it. Don't even enter it since the amount was all redeemed lawful money and the 1099K report functions as mere 3rd-party hearsay (and a bit of social conditioning).
None of these will increase your AGI. IMHO all would work. Your choice.