An incapacitating mental disorder indicated by a gross distortion of emotions and an inability to recognize reality, relate to others, and cope with ordinary demands of daily life is known as:

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The description matches the symptoms of psychosis, which is characterized by a loss of touch with reality and impaired social functioning. Dementia is a progressive decline in cognitive function, while neurosis refers to milder mental disorders without a loss of touch with reality. Psychosomatic disorders involve physical symptoms caused by psychological factors.

An Incapacitating Mental Disorder Indicated by a Gross Distortion of Emotions