Taxation Due to Car Accident...

I'm hoping that someone could help me to answer a hypothetical situation...Let's say, Jon is in a car accident in which his rear fender is damaged. Mark was at fault, and in order to avoid dealing with the insurance companies. He tells Jon to send him an estimate for the repair costs. Jon does so, and Mark sends a check for that amount to Jon. Jon decides he does not want to make the repair. Does he still have to pay taxes on the money he received from Mark? And if he does, he could always have the repair done and then exclude it from his taxes. I'm kind of curious. Any help would be appreciated!

Getting reimbursed for the loss in value to the car is not INCOME. The car is worth that much less. Repairing it brings the value back.

ALawyer's response is correct. The money is only restoring you to your previous condition.

The only exception is if the reimbursement for damages exceeds what you paid for the car. If this is true, you would be taxed on the excess.

The only problem I see is that if you don't repair the car, you won't know how much less it's worth. If you were to sell the car on the day of that accident, who's to say how much less the car is worth to the person buying it? What would the car have sold for if it wasn't damaged? If you don't know the answers to these questions, you won't know how much the car has been devalued. Something is only worth what someone is willing to pay for it!