Retirement tax questions

Not compensatory damages where there is physical sickness and/or physical injury. Non the less, the Insurance Co. issued a 1099 mics (CYA I expect).  The 'stock answer" is not what I was hoping for, the advice about "deductatbility" was provided me by an attorney AND the EEOC themselves.  What I need is HOW to properly report the 1099, without it developing the whooping $33,000 in tax in the amount you owe field?