spaceman91,
How much was the scholarship? The IRS treats it as earned income with respect to dependent's standard deduction, i.e. compare scholarship+$400 to the $1,150 default. If the scholarship was more than the 1099-NEC value minus $400, then her taxable income would be zero and the kiddie tax would be zero. If not, you would want to compare the ~$400+ self-employment tax for Schedule C (15.3% of the net Schedule C income) to the roughly 24% tax on the scholarship+700(=$3,000-$2,300) that would arise via form 8615.
