How to offset Casualty loss proceeds received in 2024 year when deductions not allowed

[Melathome]

My client suffered major flood damage in June 2024 to the first level of her personal residence.  The state issued funds to cover the repair costs that her insurance did not cover.   She received a 1099-MISC with an amount in box 3 Other Income.

The income is showing up on Sched 1 but how do I reduce this to zero using actual losses ? I've completed the casualty loss worksheet but because it is personal and not a Federally declared disaster area, it will not show up on the return and cannot link it to the Sched 1 amount.

Any suggestions ? thanks

[Just-Lisa-Now- · Accepted solution]

see if IRC 139 applies (Im not sure if it applies to all disasters or only federally declared disasters) and then you can make the adjustment on the Other Income line below the 1099MISC income

[Melathome]

Thank you for your quick answer !  I will put a negative value and reference the code on Line 12 as the State program specifically aligns with the IRC language for disaster relief.