There has to be reliable reference that this is Not Taxable for SE. You can find lots of evidence for which grants are excluded for purposes of income reporting. Until you can prove it is bifurcated (to use a word I know you like), there is only what the IRS has stated. It is not my "opinion." That is important for others reading these topics to understand. Until anyone can post authoritative reference otherwise, it's business gross income and is subject to SE for the Schedule C filer. It has been that way since these grants were first released.