Please see this answer from Expert @RobertB4444:
So there are two ways to report an EQIP grant.
In option one, you just don't report the grant. If it is spent on improving the water and soil it isn't taxable and any expenses that it is spent on are not deductible. So you just leave it off.
The other option is to report it using the 1099-G input and then enter an expense on the schedule F that generates that is exactly equal to the amount of the grant. The expense should be called "Environmental Quality Improvements." And it wipes out the taxable income.
Either option is perfectly legit. @Len1935
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