Hi and thanks for help. I followed up this conversation, I would finally like to know the 1099-G taxable grants ( box 6 has an amount for $5000) which client received should go line 1 on sch C or line 5?

And it is nontaxable for California state, how can adjust it on Schedule CA 540 , by a override in section B , line 3 as a subtraction, am I right?