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@Just-Lisa-Now- wrote:

I dunno how I missed it everywhere until today! 

I got a client that got a settlement from the CA wildfires, to the tune of over $2M, theyve got a fed balance  due of over 700k but all their money is locked up in CDs that dont mature until late May, they were freaking out, this totally saves them from either failure to pay penalty or early withdrawal penalty for cashing the CDs early!! 

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Is it taxable?  Or does it restore them to "whole" after the casualty loss?  There's a time period they have to rebuild.

Not my area of expertise but I know someone on another forum is planning on excluding a similar $900K payment under IRC 139.  No idea how similar your circumstances may be (but he's also in CA).