Theresa Sued Her Former Employer for Age,race,and Gender Discrimination

Theresa sued her former employer for age,race,and gender discrimination.She claimed $250,000 in damages for loss of income and $500,000 in punitive damages.She settled the claim for $600,000.As a result of the settlement,Theresa must include in gross income:

A) $0.
B) $400,000 [$500,000/($250,000 + $500,000) * $600,000].
C) $500,000.
D) $600,000.
E) None of the above.