Yes, but I just tried it in Lacerte.

The original $700 on the 1099-MISC and the offsetting $700 add up to zero (obviously), so Lacerte doesn't show a Schedule 1 in the completed return.  I don't know if it will be electronically transmitted or not, but if not, the AUR computers will have nothing to match to, and notices will go out.

I'd hate to claim a negative adjustment of $1 less just to get a Statement for Schedule 1 to generate.

Interestingly, TurboTax, another Intuit product, automatically puts both the original amount and the offset (using terminology "general welfare exclusion") on statement for Schedule 1, line 8z