From an accounting perspective, how are SBIR grants treated. Should they be considered a revenue Item as you are receiving money for doing work?

You must account for the income and expense of an SBIR grant. Grant income is considered income, I would suggest setting up a separate revenue account number to track grant income so it doesn't muddle up your other income.

I don't know what accounting software you're using; one example would be QuickBooks. That program allows you to set up classes. Many businesses use class accounting to track income and expense by departments, projects, etc. I've used classes to track grants. This allows you to keep your chart of accounts consistent, and then assign income and expense to a class (or in this case the SBIR grant). I might not have explained this clearly, so feel free to e-mail me and I'll try to clarify :)

Grant accounting, especially government grants, can get pretty complex. You can probably go to the granting agency's website and see if they have some accounting resources.

I received copies of 1099-Misc for the state and my copy. There was no copy for federal. How do I enter this income? Do I skip the federal and just enter the amount on my state taxes?