Derrick Was in an Automobile Accident While He Was Going

question 6

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: 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:

Statute

A written law enacted by a legislature under its constitutional lawmaking authority.

Sixth Amendment

An amendment to the U.S. Constitution guaranteeing accused persons rights in criminal proceedings, such as the right to a speedy trial and legal counsel.

Indictment

A charge or written accusation, issued by a grand jury, that probable cause exists to believe that a person has committed a crime for which he or she should stand trial.

Due Process

A fundamental constitutional guarantee that all legal proceedings will be fair, respecting all provided legal rights.