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24 July, 08:07

Acme published a story about Paul, and as a result Paul sued Acme for damage to his reputation, emotional distress, and punitive damages. Paul won an award of $36,250 for damages, $10,100 for emotional distress, and $58,200 for punitive damages. What amount must Paul include in his gross income?

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  1. 24 July, 09:28
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    all these are included in the gross income

    Explanation:

    given data

    damages = $36,250

    emotional distress = $10,100

    punitive damages = $58,200

    to find out

    What amount must Paul include in his gross income

    solution

    we know according to the tax laws that specify only payment on account of (1) physical injury and (2) physical sickness is non taxable

    so here taxpayers receive

    damages emotional distress punitive damages

    they are not associate with the physical injury so all these mentioned are not covered in physical damages

    so we can say that all these are included in the gross income
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