Damages received related to employment are normally taxable as ordinary income., Such payments could include awards to employees for breach of an employment contract by an employer or awards for back pay.

When a taxpayer receives damages for injury to capital the basis of the property is reduced and, no income results (unless the amount exceeds the basis of the asset involved).

Recoveries of lost profits are taxable as ordinary income.

Damages received as a result of a broken agreement to purchase property are taxable.

Amounts received from business interruption insurance policies to compensate for lost profits are taxable ordinary income.