Derrick Was in an Automobile Accident While He Was Going

question 30

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:

Marital Problems

Issues or conflicts between married partners that can affect their relationship negatively.

Psychiatrists

Medical doctors specializing in the diagnosis, treatment, and prevention of mental illness and emotional disorders.

Schizophrenia

A mental disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.

Clinical Psychologist

A professional specializing in diagnosing and treating mental health disorders through therapy and behavioral interventions.