5Q36 - the $1,000 amount received for damage to her...

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pp.5-41 Q.36
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Leigh sued an bill collector and received the following settlement: Damage to her automobile the collector attempted to repossess $1,000 Physical damage to her arm caused by the collector $15,000 Loss of income while her arm was healing 8,000 Punitive damages $50,000
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a. What effect does the settlement have on her gross income? Leigh must include in gross income the punitive damages of $50,000. $15,000 and $8,000 may be excluded as arising out of the physical injury, except
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Unformatted text preview: the $1,000 amount received for damage to her automobile. This amount is a nontaxable recovery of capital (i.e., it reduces her basis for the automobile by $1,000). b. Assume she also collected $40,000 of damage for slander to her personal reputation. Is this $40K included in her gross income? The $40,000 is included in Leighs gross income because it did not arise out of a physical personal injury....
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5Q36 - the $1,000 amount received for damage to her...

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