Question

McDonalds serves you very hot coffee. You burn your tongue. Everything now tastes bitter. A doctor says the burning is the cause of this. You get depressed because you no longer enjoy food. You sue McDonalds. You have $25,000 in doctor bills, lab reports, and surgery. You have $10,000 in bills from seeking therapy regarding your depression. The court awards you $50,000 to cover your bills. Any excess was charged to punish McDonalds. How much of this is taxable?

Answer 1

Award Received	50,000
Medical Expenses	25,000
Depression Therapy expense	10,000
Taxable award will be	$ 15,000	=50000-25000-10000

$ 15,000 received to Punish MC Donalds will be taxable because payments for punitive damages (amounts paid for the specific purpose of punishing thewrongdoer) are generally taxable.