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Based on what you wrote, Bob would have $30,000 taxable income since that represents loss of income.
As an aside, it makes sense that the insurance company wouldn't pay punitive damages. Punitive damages are only given in cases where the tortfeaser acts purposefully, and the insurance policy likely only covers negligent conduct. Also, Amber would not likely even be liable for purposeful conduct, so it sounds like the settlement as you describe makes sense.
Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied.