Upon further reflection, the cleanest way to do this is to enter it on the 2016 Schedule C as a negative expense. It will appear as a line item on page 2 Part V of the Sch C (Other Expenses) and TurboTax will subtract it from the total expenses. Simple & clean.
You'll do this in the Business Expenses section by selecting "Other Common Business Expenses," then scroll to the bottom of the "Let's Write off some business expenses" page and select "Other Misc Expenses." You'll be shown a write-in grid where you can write "refund of expenses" and then enter the amount using the "dash" symbol to denote negative.
