IMO you should talk to an accountant. It's pretty cheap to do that in comparison to the tax bills (my accounting bills are <$1000/year for a similar situation to you). Phase II is a lot of money, and you may be able to get some venture debt now that you're past Phase I to cover what the SBIR doesn't (ie the taxes). There's also some chance that the law around this will be reversed.
No, it adds a huge burden. It's already eaten up a large amount of my bandwidth. If they don't repeal it I also have to get some kind of VC or other debt funding, which is by no means guaranteed. Not to mention that writing these grants is not inconsequential in terms of effort in the first place. At any point the added strain and uncertainty could force me out of business.
