Assume the same facts as in Problem 1:8-34. In addition, assume that in 2020, Angela receives an additional $7,000 in a settlement of a lawsuit arising because of the snow-skiing accident. $4,000 of the settlement is to pay Angela's medical bills, and $3,000 is to reimburse her legal expenses. What is the proper tax treatment of this $7,000 settlement?

Problem 1: 8-34

Item	Amount
Doctor bills	$11,700
Hospital bills	9,400
Legal fees in suit against ski resort	3,000