MQ3

In 2007, Joyce was in an automobile accident and suffered physical injuries. The accident was caused by Ramon’s negligence. In 2008, Joyce collected from the insurance company. She received $15,000 for loss of income, $5,000 punitive damages, and $8,000 for medical expenses which she had not deducted on her 2007 tax return. As a result of the above, Joyce’s 2008 gross income is increased by $28,000.