On February $10$ of the current year, Rose

was in an automobile accident while she was

going to work. The doctor advised her to stay

home for $6$ months because of her injuries.

On February $25$ of the current year, she filed

a lawsuit. On July $20$ of the current year, Rose

returned to work. On December $15$ of the

current year, the lawsuit was settled and Rose

received the following amounts:

Compensation for lost wages

Personal injury damages awarded

$($none of which was for punitive

damages$)$

How much of the settlement must Rose include

in ordinary income on her current$-$year tax

return?

A$.$ $$0$

B$.$ $$25,000$

C$.$ $$40,000$

D$.$ $$65,000$