A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for:
A)Only tuition.
B)Tuition, books, and supplies.
C)Tuition, books, supplies, meals, and lodging.
D)Meals and lodging.
E)None of the above.

Question

Quizplus · Accepted Answer

According to IRS Publication 970, scholarship proceeds used to pay for tuition, fees, books, and supplies may be excluded from gross income. However, any portion of the scholarship used for room and board, travel, or other living expenses must be included in gross income. Therefore, choices C and D are incorrect. Choice A is too narrow, as books and supplies are also eligible for exclusion. Choice E is incorrect as some scholarship proceeds may be excluded from gross income.

A Scholarship Recipient at State University May Exclude from Gross