In 2010,Theresa was in an automobile accident and suffered physical injuries.The accident was caused by Ramon's negligence.In 2011,Theresa collected from his insurance company.She received $15,000 for loss of income,$25,000 punitive damages,and $8,000 for medical expenses which she had deducted on her 2010 tax return (the amount in excess of 7.5% of adjusted gross income).As a result of the above,Theresa's 2011 gross income is increased by $33,000.

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Theresa received $15,000 for loss of income, $25,000 punitive damages, and $8,000 for medical expenses. Only the $8,000 for medical expenses is taxable income because it was deducted on her 2010 tax return. Therefore, her gross income in 2011 increased by $33,000.

In 2010,Theresa Was in an Automobile Accident and Suffered Physical