How to handle a COVID Grant

[dgalway1]

We operate a farm and during COVID applied for several grants to help with lost farm income. One was through the State of CA SBA. We received a 1099G that reports it as regular taxable income, not farm or business income. I want to report it as farm income on the schedule F. Can I do that? 

[DawnC]

No.   Amounts in Box 6 are taxable as ordinary income unless Box 8 indicates it is business income.    Reporting as ''other income'' on Schedule F will generate self-employment tax.   Reporting it as ''other income'' on Form 1040 will not generate any self-employment tax, but will tax the income as ordinary income.     Enter the 1099-G from the Other Common Income section if you have taxable grants to enter.    Use the OTHER 1099-G section.

[dgalway1]

But the farm needs that income to show a profit last year. How do I do that? And how much self employment tax will be generated on $5000?

[PattiF]

This from @KrisD15 explains why this cannot be entered as income:

"Box 6 on the 1099-G must be entered in the Personal section. 

The reasoning is that the Grant cannot be counted into the Qualified Business Income Deduction, therefore cannot be included in farm income."