- quote -

Section 139 of the Internal Revenue Code (Title 26, U.S. Code)
specifically exempts from gross income qualified disaster relief
payments. Here's the definition of a qualified payment (note
that Katrina & Rita are qualified disasters):

For purposes of this section, the term ''qualified disaster
relief payment'' means any amount paid to or for the benefit of
an individual -
(1) to reimburse or pay reasonable and necessary
personal, family, living, or funeral expenses incurred as a
result of a qualified disaster,
(2) to reimburse or pay reasonable and necessary expenses
incurred for the repair or rehabilitation of a personal
residence or repair or replacement of its contents to the extent
that the need for such repair, rehabilitation, or replacement is
attributable to a qualified disaster,
(3) by a person engaged in the furnishing or sale of
transportation as a common carrier by reason of the death or
personal physical injuries incurred as a result of a
qualified disaster, or
(4) if such amount is paid by a Federal, State, or local
government, or agency or instrumentality thereof, in
connection with a qualified disaster in order to promote the
general welfare, but only to the extent any expense
compensated by such payment is not otherwise compensated for by
insurance or otherwise.

In addition, the IRS FAQs on this subject state:

Are tax relief assistance payments taxable?

Usually, no.

People in a Presidentially-declared disaster area who
receive grants from state programs, charitable organizations or
employers to cover medical, transportation or temporary housing
expenses do not include these grants in their income.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Andy asks:

I was wondering if the people from New Orleans, and other
places, who are receiving monetary , and other benefits from
the various government and private agencies are required to
pay income tax on them ?

Andy

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >