if you link it to the property, it will generate self-employment tax.
Just FYI/Reminder that SCH E income is not subject to SE tax. But a taxable grant is exactly that - a taxable grant. Doesn't matter what it was for either. This particular situation means you'll have that much less to report on the SCH E itself, and will most likely just increase the PAL carry over loss by the amount of the grant, on the 8582.
