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On February 1 0 of the current year, Rose was in an automobile accident while she was going to work. The doctor advised her to

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)
$25,000
40,000
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
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