In December 2015,Emily,a cash basis taxpayer,received a $2,500 cash scholarship for the Spring semester of 2016.However,she did not use the funds to pay the tuition until January 2016.Emily can exclude the $2,500 from her gross income in 2015.

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Cash basis taxpayers report income in the year it is received, but scholarships used for tuition are generally excluded from gross income, even if the payment is received in a different year than it is used.

In December 2015,Emily,a Cash Basis Taxpayer,received a $2,500 Cash Scholarship