Mr. Kamann's answer in a different thread appears to be the best:  "In my opinion, disallowing tips to self-employed people who don't receive 1099s comes under the "absurd result" rule of statutory construction that means the literal reading of Section 224(a) can be thrown out.  I'm taking the deduction for my self-employed clients who do personal-service work.  You do what you want with yours.  When Congress and/or Treasury clears this up, you can always file amended returns."

So, I will:

• Report the tips gross receipts on Schedule C, line 1.

• Calculate net earnings normally.

• Separately compute Qualified Tips deduction:

  • Deduction amount = $Tips × statutory percentage (OBBBA sets 100% deduction for qualified tips, limited to the lesser of (a) actual tips or (b) statutory threshold for the year).

  • Claim the deduction on Schedule 1, Part II, “Other adjustments.”

  • Label as “IRC §224 Qualified Tips Deduction.”