It depends on the nature of the lawsuit. If it involved replacement of lost income, the proceeds would be subject to tax and therefore would be part of his gross income. If the lawsuit involved an award for injurious or punitive damages, then the award would not be subject to taxation.
Regardless of whether the award was part of gross income, it must be considered when determining who provided your brother's support for the year. If it was gross income, he cannot be claimed as a dependent at all, as his gross income will exceed $4,050.
[Edited 1/18/17 11:50 am]
It depends on the nature of the lawsuit. If it involved replacement of lost income, the proceeds would be subject to tax and therefore would be part of his gross income. If the lawsuit involved an award for injurious or punitive damages, then the award would not be subject to taxation.
Regardless of whether the award was part of gross income, it must be considered when determining who provided your brother's support for the year. If it was gross income, he cannot be claimed as a dependent at all, as his gross income will exceed $4,050.
[Edited 1/18/17 11:50 am]