Joe is walking down Charles Street when he trips on an unrepaired area of sidewalk and breaks his ankle. As a result, he ends up requiring surgery, which costs $5000. In the legal settlement with the city, Baltimore agrees to reimburse him for these expenses. Are these payments taxable to Joe? Assume the same facts as above, except that the settlement is allocated $3000 to medical expenses and $2000 to lost wages. What would be the tax consequences to Joe?