Federal Grant for Wetlands

[gtownparks]

Have a client who turned his rented farm land into wetlands. Feds gave him $18,000 to pay the excavator and to buy seed. They in turn sent him a 1099-G for $18k. The excavator cost about $25k. Can this 1099-G be offset by the excavating expense? He normally reported the farm land rental income on Sch. E. What do you think?

[Bees Knees]

TTB, page 5-29 deals with the option to choose to expense certain soil and water conservation expenses verses capitalizing the expense. You may want to read that to see if it applies to your situation.