I:4-53 Court and Insurance Awards. Determine whether the following items represent taxable income.

a. As the result of an age discrimination suit, Pat received a cash settlement of $40,000.

One-half of the settlement represented wages lost by Pat as a result of the discrimination and the balance represented an award based on personal injury.

b. Matt sued the local newspaper for a story that reported he was affiliated with organized crime. The court awarded him $50,000 of libel damages.

c. Pam was injured in an automobile accident and received $10,000 from an employersponsored disability policy. In addition, her employer-financed medical insurance policy reimbursed her for $15,000 of medical expenses.