Check my work Four years ago, Lyle Mercer was injured in a railroad accident and sued the railroad for damages. The jury required the railroad to pay $725,000 compensation for his physical injuries, $176,000 for lost wages during his long recuperation, and $1,305,000 punitive damages. Assume the taxable year is 2021. Required: How much of the $2,206,000 settlement is included in Lyle's gross income? Amount included in gross income