It seems like whoever paid the "stipend" does not think the payment was for the compensation of the work performed. *IF* they are correct about that, you can't choose to make it earned income.
However, in my opinion, some of these arrangements don't seem right to me, and it might have been wrongly reported. Whether or not this situation is correct or not, I have no idea. We would need to know a lot more about the stipend, why your client received it, who paid it, etc..
