Ask Question
2 April, 22:37

Pam recently was sickened by eating spoiled peanut butter. She successfully sued the manufacturer for her medical bills ($4,380), her emotional distress ($8,700-she now fears peanut butter), and punitive damages ($51,000). What amount must Pam include in her gross income?

+4
Answers (1)
  1. 2 April, 22:46
    0
    amount Pam include in her gross income is $51,000

    Explanation:

    given data

    medical bills = $4,380

    emotional distress = $8,700

    punitive damages = $51,000

    to find out

    amount must Pam include in her gross income

    solution

    we know that according to tax laws any payments other than punitive damages in account of physical injury or any physical sickness are not taxable

    so here Punitive damages is fully taxable and Punitive damages is taxable and it should be reported as other income even

    and as we know that medical bills is actual cost of the medicine

    but we can not add in gross income and here emotional stress not part of gross income because emotional stress is treated as damages receive as physical injury or sickness

    so amount Pam include in her gross income is $51,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Pam recently was sickened by eating spoiled peanut butter. She successfully sued the manufacturer for her medical bills ($4,380), her ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers