Ilana is a successful sole proprietor who owns a cosmetic store. She was injured in a car accident. The driver of the other car was found to be at fault for the accident. Ilana received the following payments:

I. Hospital expenses

II. Payments for pain and suffering

III. Punitive damages

IV. Loss of income from not being able to work in the cosmetic store

V. Medical expenses Of the following payments, which one(s) is (are) includable in Ilana’s gross income?

a. I, and III.

b. II and III.

c. III.

d. III and IV.

e. None of the above.