Derrick was in an automobile accident while he was going to work. The doctor advised him to stay home for eight months due to his physical injuries. The resulting lawsuit was settled and Derrick received the following amounts: 
How much of the settlement must Derrick include in ordinary income on his tax return?
Definitions:
Merit Pay Plan
A compensation strategy that awards pay increases or bonuses based on an employee's performance, accomplishments, or achievements.
High Pay
A level of remuneration that is significantly above the average or expected salary for a job or position.
Perform
To carry out, execute, or conduct (an action or task).
Intrinsic Rewards
Satisfaction a person derives from the activity itself, rather than from any external rewards.
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