A drunk driver seriously injured Leah. The court awarded her $200,000 for her physical injuries and $300,000 as punitive damages. Leah must include $300,000 in income.

Name: A drunk driver seriously injured Leah. The court awarded her $200,000 for her physical injuries and $300,000 as punitive damages. Leah must include $300,000 in income.
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Question

Quizplus · Accepted Answer

Punitive damages are considered taxable income by the IRS, unlike compensatory damages for physical injuries, which are typically not taxable.

A Drunk Driver Seriously Injured Leah