Katrina victims may face tax hit

NEW ORLEANS, 17 (UPI) -- Louisiana residents who received federal grant money to rebuild their homes after Hurricane Katrina may face higher income taxes next year.

If residents took a deduction for damaged property on their 2005 tax return, the law requires that the grant money they're given under the Road Home program be added to their taxable income in the year it's received, The New Orleans Times-Picayune reported Monday.

The newspaper said the Internal Revenue Service normally treats grants as a nontaxable gift unless the homeowner has already claimed a casualty loss in which case the IRS views it as a duplication