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Different expert here. It is unlikely that any of the damages you received would be classified as "personal injury". Only compensatory damages received for personal injury are exempt from tax. Yes, you endured emotional stress, but the lawsuit related to your business contract not medical harm. Thus all of the proceeds will be income to the corporation. It may be capital gain if you received them in exchange for a franchise which you no longer have.
For My Virtual CPA: it wasn't a court judgment; it was a pre-trial settlement. Thus, no guidance or definition from the court on 'type' of award (compensatory vs punitive). We'd like to declare some of the settlement as capital gains and the franchisor purchasing goodwill by buying back the franchises. Is that a valid approach?