TAX AND ACCOUNTING- HELP ASAP

Anonymous
timer Asked: Mar 28th, 2016

Question description

In March, Jim, a firefighter, was injured in the line of duty. The injury was a result of interference from a shop owner. He incurred medical expenses of $14,800 related to the injuries. The shop owner’s insurance company offered, and Jim accepted, $34,800 and acknowledged that the $20,000 above medical costs was to avoid court proceedings and a potentially higher punitive damage awards. Jim prepared and filed his income tax return for the year and included the medical expenses but did not include the insurance settlement since it came after the tax return was filed. What is the ethical issue in this case? What advice would you give Jim? What are the tax costs of his options?

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