McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 39

This week Jim's residence was heavily damaged by a storm system that spread destruction throughout the region.While Jim's property insurance covers some of the damage, there is a significant amount of uninsured loss.The governor of Jim's state has requested that the president declare the region a federal disaster area and provide federal disaster assistance.Explain to Jim the income tax implications of such a declaration and any associated tax planning possibilities.