"Yes, but I think the question is about the excess above $3,000. I don't think it qualifies,"

It's the opposite.

The $3k isn't reportable as taxable under the pso provision; it already got a tax benefit by exclusion. You cannot also use that for another deduction or take another credit for something that already got excluded from being reported and from being taxed.

Or, as a long-time and long-gone member of this group put it: You cannot write off what you never wrote on.

The rest should qualify up to the taxable business income. Any subsidy would reduce what the taxpayer had to pay, and that reduces what they can deduct, the same as ACA.