The grant application and terms should determine how you need to account for the grant proceeds. Generally, grants are not usually guaranteed and the expense incurred for reimbursement would have been made whether the grant was in fact granted or not. You do not say if this was the situation or not. I agree with the CPA's you have spoken with that the grant should be labeled as Grant Income and the expenses listed in full rather than reduced by the reimbursement. I can site no specific guidance on this other than for full disclosure purposes.
Look to your application and terms for how to treat and record the grant proceeds. I do yield a bit as far as full disclosure if the expense was listed in full and then was followed by: "Less: Grant Proceeds in the amount of XXX" that would satisfy full disclosure in any financial statement but I admit does not solve your situation in TurboTax.
@Fat Poutine
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