Questions abound concerning how to report disaster assistance received by clients this tax season. Recently, IRS clarified the tax consequences of financial assistance received under the Jumpstart Iowa Housing and Small Business programs. IRS says that any financial assistance received under these programs first reduces the amount of casualty loss allowed as a deduction on an individual’s or small business’s federal and Iowa income tax return. That means they are to be treated similarly to the receipt of insurance proceeds. For example, if a taxpayer receives $5,000 of Jumpstart assistance in 2008 after incurring a $15,000 casualty loss, $10,000 is allowed as a casualty loss on the federal and Iowa returns. If the $15,000 casualty loss was sustained in 2008, but the Jumpstart assistance wasn’t received until 2009, the full $15,000 loss can be deducted on the taxpayer’s 2008 returns (federal and Iowa), and the $5,000 is reported as income on the 2009 returns.