If you, personally, received a grant in relation to Hurricane Sandy, chances are that grant isn’t taxable to you. However, if you are a business that received a disaster relief grant, it IS FULLY TAXABLE. Hate to be the bearer of bad news, but we also don’t want you getting stuck with an unexpected tax bill.
Please see these links for more details:
http://www.sba.gov/community/blogs/hurricane-sandy-tax-and-financial-implications-your-small-business