Your details aren't really clear. Let me state some general principles.
- If you are reimbursed for repairs that you previously made, that is not taxable.
- If they buy back the car, the payment is not taxable up to your original cost (including sales tax), but amounts over your original price are taxable.
- Amounts awarded for other damages, punitive damages, and attorney fees, are taxable. And unfortunately, you can't deduct the attorney fees as an expense (unless this vehicle is owned by a business, in which case the attorney fees are a business expense). So you will pay income tax on the attorney fees even though you didn't keep them.
