In 2016,Theresa was in an automobile accident and suffered physical injuries.The accident was caused by Ramon's negligence.In 2017,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 2016 tax return (the amount in excess of 10% of adjusted gross income).As a result of the above,Theresa's 2017 gross income is increased by $56,000.

Question

Quizplus · Accepted Answer

Theresa received a total of $81,000 ($15,000 + $10,000 + $50,000 + $6,000) from Ramon's insurance company in 2017. Since she deducted $6,000 for medical expenses on her 2016 tax return, she must include that amount as income in 2017. Therefore, her gross income for 2017 is increased by $81,000, not $56,000. So, the statement in option A is true.

In 2016,Theresa Was in an Automobile Accident and Suffered Physical