I:8-35 Reimbursement of Previously Deducted Medical Expenses. Assume the same facts as in Problem I:8-34. In addition, assume that in 2023, Angela receives an additional $7,000 in a settlement of a lawsuit arising because of the snow-skiing accident. $4,000 of the settlement is to pay Angela’s medical bills, and $3,000 is to reimburse her legal expenses. What is the proper tax treatment of this $7,000 settlement?