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What effect does the settlement have on Leigh gross income

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Reference no: EM132655593

Problem - Leigh sued an overzealous bill collector and received the following settlement:

Damage to her automobile that the collector attempted to repossess $3,300

Physical damage to her arm caused by the collector 15,000

Loss of income while her arm was healing 6,000

Punitive damages 80,000

Required -

a. What effect does the settlement have on Leigh's gross income?

b. Assume that Leigh also collected $25,000 of damages for slander to her personal reputation caused by the bill collector misrepresenting the facts to Leigh's employer and other creditors. Is this $25,000 included in Leigh's gross income? Explain.

 

Reference no: EM132655593

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