Assume the same facts as in Problem I:7-35. In addition, assume that in 2018, 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?

Data from problem I:7-35

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

Angela is single and has no dependents. For the year, her salary is $58,000. She pays $600 in medical and dental insurance premiums, which is withheld from her paycheck on an after-tax basis, $2,750 in mortgage interest on her home, and $1,200 in interest on her car loan. Her health insurance provider reimburses her for $10,000 of the medical expenses. What is her 2017 taxable income?