During 2015 and 2016, Susan Spaulding was employed as a lathe operator at Betts Bats, a Massachusetts bat maker. Ms. Spaulding alleges that she was repeatedly harassed by her coworkers because of her gender. Allegedly because of the harassment, she left Betts's employ in April of 2016. She subsequently secured employment with another sports equipment company. Spaulding earned more in her new employment in 2017 than she had in either 2015 or 2016 at Betts. In June 2016, Spaulding filed a complaint against Betts and two of her former coworkers seeking money damages to "remedy Betts's discrimination in employment against her based upon gender." Her complaint also sought relief under Massachusetts labor laws to remedy Betts's "failure to pay compensation owed" Spaulding alleged that she had suffered "psychological and physical harms" and had been "constructively discharged" from Betts by virtue of a hostile work environment caused by the alleged discrimination. She requested compensatory damages, punitive damages, and liquidated damages. In December 2016, the parties entered into a settlement agreement. Spaulding agreed that, in exchange for a payment of $45,000, she would release all claims against the defendants including claims for back pay, bonuses, commissions, separation allowance, benefits, severance pay, pension, and health benefits as well as any other claims for compensation with respect to the employment relationship and termination thereof. The settlement agreement did not mention any physical or emotional injury suffered by taxpayer, nor did it state that any portion of the $45,000 was being paid in consideration of claims for physical or emotional harm. Betts' insurance company issued to Spaulding's attorney a check for $45,000 pursuant to the settlement. Subsequently, taxpayer's attorney issued her a check for $30,000, retaining $15,000 as the agreed-upon legal fees. The insurance company issued the taxpayer a Form 1099-MISC, Miscellaneous income, reporting the payment of $45,000 as settlement proceeds. Questions:

1. Is Ms. Spaulding entitled to deduct the legal fees she incurred to secure a settlement of her claim for unlawful employment discrimination? If the fees are deductible, should she take them above or below the line?

2. What portion, if any, of the $45,000 is taxable? Justify your answer.