Final answer:
Amounts awarded in a settlement or judgement for back pay should be included in income. This is true. When a settlement or judgement is reached in a legal case for back pay, the recipient is typically required to report the amount as income for tax purposes.
Step-by-step explanation:
Amounts awarded in a settlement or judgement for back pay should be included in income. This is true. When a settlement or judgement is reached in a legal case for back pay, the recipient is typically required to report the amount as income for tax purposes. This applies to both individuals and businesses. For example, if an employee prevails in a lawsuit and is awarded back pay, that amount is considered taxable income.
The statement that amounts awarded in a settlement or judgment for back pay should be included in income is typically true. When an individual receives back pay, either through a settlement or a judgment, it is considered a compensation for what they should have earned as salary or wages. This type of income is generally taxable and must be reported on that individual's tax return. The Internal Revenue Service (IRS) treats these amounts as taxable income, and therefore, they should be included in the individual's gross income for the year in which they are received.