In December 2013,Emily,a cash basis taxpayer,received a $2,500 cash scholarship for the Spring semester of 2014.However,she did not use the funds to pay the tuition until January 2014.Emily can exclude the $2,500 from her gross income in 2013.

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Scholarships used for tuition and related expenses are generally excludable from gross income, and since Emily is a cash basis taxpayer, the timing of the actual payment in January 2014 does not affect the exclusion for the year she received the scholarship.

In December 2013,Emily,a Cash Basis Taxpayer,received a $2,500 Cash Scholarship