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In that case, you'd report the medical expenses related to the incident as miscellaneous (other) income. Punitive damages are taxable except in certain wrongful death cases, as are awards for employment discrimination and injury to reputation (libel, slander, defamation, etc.).
The beneficiary, not the trust, pays the income tax on the taxable amount of the distributions. Generally, if an amount is distributed from a trust, that amount is considered to come out of current-year income first, then from accumulated capital or principal.