In 2017, Theresa was in an automobile accident and suffered physical injuries. The accident was caused by Ramon's negligence. In 2018, Theresa collected from his insurance company. She received $15,000 for loss of income, $10,000 for pain and suffering, $50,000 for punitive damages, and $6,000 for medical expenses which she had deducted on her 2017 tax return (the amount in excess of 10% of adjusted gross income). As a result of the above, Theresa's 2018 gross income is increased by $56,000.

Question

Quizplus · Accepted Answer

The $50,000 for punitive damages and the $6,000 for medical expenses previously deducted are taxable, totaling $56,000. The other amounts are not taxable.

In 2017, Theresa Was in an Automobile Accident and Suffered