Four years ago, Lyle Mercer was injured in a railroad accident and sued the railroad for damages. The jury required the railroad to pay \$627,500 compensation for his physical injuries, \$170,000 for lost wages during his long recuperation, and \$1,050,000 punitive damages. Assume the taxable year is 2022.
Required:
How much of the \$1,847,500 settlement is included in Lyle's gross income?
Amount included in gross income