See RobertB4444's post above. You will report the grant income under the 1099-G section and then the expenses under Schedule F. This will cancel out the income. I have copied his post here for easy review:
"Report it using the 1099-G input and then enter an expense on the schedule F that 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.
@e15652
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