I have a client who lives on 40 acres. He does some farming on it.  There is a "Swell" in the land which was eroding over the past 4 years. He said it was previously a 6 foot swell and now it's 12 foot swell. The runoff is heading to a creek, which eventually makes it way into the Chesapeake Bay.  He received a grant (both federal and local here in MD) for approximately $56k to put in a drainage line (600 ft) and an erosion field of 150 ft of rock to help stop the erosion. 

He spent about $52k to have all the work done.

He received a 1099G box 6 "taxable grants" for $56k.

Is the $56k taxable?  Since it wasn't labeled as Agriculture payments (box 7), I'm unable to link it to his SCH F. My research seems to indicate he has to pay tax on the $56k, but want to get the communities input.

Thank you!!