In 2019, Theresa was in an automobile accident and suffered physical injuries.The accident was caused by Ramon's negligence.In 2020, 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 that she had deducted on her 2019 tax return (the amount in excess of 10% of adjusted gross income).As a result of this, Theresa's 2020 gross income is increased by $56,000.

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Theresa received $81,000 in total from Ramon's insurance company in 2020 due to the accident. This amount is taxable and is added to her gross income for the year, thus increasing it by $56,000.

In 2019, Theresa Was in an Automobile Accident and Suffered