Derrick Was in an Automobile Accident While He Was Going

question 84

Multiple Choice

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: $\begin{array}{|l|r|}\hline\text { Compensatory damages for physical injury } & \$ 80,000 \\\hline \text { Punitive damages } & 95,000 \\\hline\end{array}$ How much of the settlement must Derrick include in ordinary income on his tax return?

• A) $0
• B) $80,000
• C) $95,000
• D) $175,000

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Definitions:

Proposition

A statement expressing an idea that can be true or false.

Controversial

Something that causes disagreement or debate, often because it challenges established views.

True or False

A statement of logical assessment that evaluates to either correct or incorrect.

Reasoning

The mental process of using logic to identify connections, draw conclusions, solve problems, or make decisions.