Pam recently was sickened by eating spoiled peanut butter.She successfully sued the manufacturer for her medical bills ($3,700), her emotional distress ($6,000-she now fears peanut butter), and punitive damages ($44,000).What amount must Pam include in her gross income?
A)$44,000
B)$50,000
C)$47,700
D)$9,700
E)Zero-none of these benefits are included in gross income.

Question

Quizplus · Accepted Answer

Punitive damages are considered taxable income, so Pam must include the $44,000 in her gross income. The other amounts for medical bills and emotional distress are not taxable.

Pam Recently Was Sickened by Eating Spoiled Peanut Butter