Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill

Exercise 25

Yukio was seriously injured when he fell through an open manhole. Yukio was awarded compensatory damages of $500,000 for his injuries, loss of current wages, reduced future earning ability, and the suffering he incurred and may incur in the future. Is any of the settlement taxable to Yukio Specifically, is the amount for lost wages taxable