Is there a way to appeal a bogus 1099 that a company doesnt fix?
Go ahead and report the income you believe is correct, but the mismatch may trigger an IRS audit of your tax return. If so, simply provide the auditor with documentation for how you calculated your income, and inform them that the 1099 from Prosper was incorrect. Then the IRS may audit the company.
The 1099 should just be a summary of how much money prosper paid you. If your receipt of payments and/or deposits from prosper differ, you have the winning argument on your side and Prosper will be singing the blues. I'd recommend printing out 2 records. Your Month to Month statements from Prosper and your Bank Account.
If you are on the side of righteousness, Prosper will be crying. Although I would first confront Prosper to correct your 1099. If they refuse or are lazy about it, just let them know that you'll be filing a corrected 1099 with documentation to back it up and they can answer to the IRS when they come knocking.