§117 — Qualified scholarships
692 cases·114 followed·97 distinguished·2 questioned·18 criticized·1 limited·8 overruled·452 cited—16% support
Statute Text — 26 U.S.C. §117
Gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii).
For purposes of this section—
The term “qualified scholarship” means any amount received by an individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses.
For purposes of paragraph (1), the term “qualified tuition and related expenses” means—
tuition and fees required for the enrollment or attendance of a student at an educational organization described in section 170(b)(1)(A)(ii), and
fees, books, supplies, and equipment required for courses of instruction at such an educational organization.
Except as provided in paragraph (2), subsections (a) and (d) shall not apply to that portion of any amount received which represents payment for teaching, research, or other services by the student required as a condition for receiving the qualified scholarship or qualified tuition reduction.
Paragraph (1) shall not apply to any amount received by an individual under—
the National Health Service Corps Scholarship Program under section 338A(g)(1)(A) of the Public Health Service Act,
the Armed Forces Health Professions Scholarship and Financial Assistance program under subchapter I of chapter 105 of title 10, United States Code, or
a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in such section).
Gross income shall not include any qualified tuition reduction.
For purposes of this subsection, the term “qualified tuition reduction” means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(1)(A)(ii) for the education (below the graduate level) at such organization (or another organization described in section 170(b)(1)(A)(ii)) of—
such employee, or
any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132(h).
Paragraph (1) shall apply with respect to any qualified tuition reduction provided with respect to any highly compensated employee only if such reduction is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees (within the meaning of section 414(q)). For purposes of this paragraph, the term “highly compensated employee” has the meaning given such term by section 414(q).
In the case of the education of an individual who is a graduate student at an educational organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, paragraph (2) shall be applied as if it did not contain the phrase “(below the graduate level)”.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.117-1 Exclusion of amounts received as a scholarship or fellowship grant
- Treas. Reg. §Treas. Reg. §1.117-1(a) In general.
- Treas. Reg. §Treas. Reg. §1.117-1(b) Exclusion of amounts received to cover expenses.
- Treas. Reg. §Treas. Reg. §1.117-2 Limitations
- Treas. Reg. §Treas. Reg. §1.117-2(a) Individuals who are candidates for degrees—(1) In general.
- Treas. Reg. §Treas. Reg. §1.117-2(b) Individuals who are not candidates for degrees—(1) Conditions for exclusion.
- Treas. Reg. §Treas. Reg. §1.117-2(i) §1.117-2(i)
- Treas. Reg. §Treas. Reg. §1.117-3 Definitions
- Treas. Reg. §Treas. Reg. §1.117-3(a) Scholarship.
- Treas. Reg. §Treas. Reg. §1.117-3(b) Educational organization.
- Treas. Reg. §Treas. Reg. §1.117-3(c) Fellowship grant.
- Treas. Reg. §Treas. Reg. §1.117-3(d) Contributed services and accommodations.
- Treas. Reg. §Treas. Reg. §1.117-3(e) Candidate for a degree.
- Treas. Reg. §Treas. Reg. §1.117-4 Items not considered as scholarships or fellowship grants
- Treas. Reg. §Treas. Reg. §1.117-4(a) Educational and training allowances to veterans.
- Treas. Reg. §Treas. Reg. §1.117-4(b) Allowances to members of the Armed Forces of the United States.
- Treas. Reg. §Treas. Reg. §1.117-4(c) Amounts paid as compensation for services or primarily for the benefit of the grantor.
- Treas. Reg. §Treas. Reg. §1.117-5 Federal grants requiring future service as a Federal employee
- Treas. Reg. §Treas. Reg. §1.117-5(a) In general.
- Treas. Reg. §Treas. Reg. §1.117-5(b) Exception for uniformed services scholarship programs.
- Treas. Reg. §Treas. Reg. §1.117-5(c) Definitions—(1) Qualified tuition and related expenses.
- Treas. Reg. §Treas. Reg. §1.117-5(d) Records required for exclusion from gross income.
- Treas. Reg. §Treas. Reg. §1.117-5(e) Applicability of rules of §§ 117(a) and 117(b).
- Treas. Reg. §Treas. Reg. §1.117-5(f) Effective date.
- Treas. Reg. §Treas. Reg. §1.117-5(i) §1.117-5(i)
692 Citing Cases
Thus, unlike scholarships, some grants may come with "strings", and the term "grant" includes at least some arrangements unlike "scholarships" as described by the Supreme Court in Bingler. Because U.S. tax law does not use or provide a meaning ofthe Treaty phrase at issue, "grant, allowance, or other similar payments", article 3(2) does not direct us to apply U.S. law in construing that phrase. D. Whether Petitioner Was Temporarily Present in the United States for the "Primary Purpose ofStudying
d any other fact which tends to indicate whether the sale or transaction was in furtherance of an occupation of the taxpayer. [Friend v. Commissioner, 198 F.2d at 287.]3 3Although these factors evolved in connection with the Court’s consideration of sec. 117 of the 1939 Internal Revenue Code, the statutory language is identical to that of sec. 1221(1), as in effect during the 1998 tax year, and the factors established in Friend v. Commissioner, 198 F.2d 285, 287 (10th Cir. 1952), affg. a Memoran
- 5 - following type of payment is not excludable from income under section 117: any amount paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research, if such amount represents either compensation for past, present, or future employment services or represents payment for services which are subject to the direction or supervision of the grantor. Sec. 1.117-4(c)(1), Income Tax Regs. The Supreme Court has held that: The thrust of the provision [in the section 11
Petitioner originally contended that section 117 excluded the Globe payment from income.
on.” (Emphasis added.) The sole dispute in this case is whether Dr. Baturin’s compensation from Jefferson Lab is properly characterized as a “grant, allowance, or other similar payment[].” B. Quid pro quo The Fourth’s Circuit’s opinion “look[ed] to I.R.C. § 117[14] and its implementing regulations to inform whether payments are tax-exempt ‘grant[s], allowance[s], or other similar payments’ under Article 18 of the United States-Russia Tax Treaty.” Baturin II, 31 F.4th at 175. Under that section 1
As the closest domestic tax law analog, respondent points us to section 117, which exempts from taxation as a “‘qualified scholarship’ .
t considered wages under the Internal Revenue Code, and, therefore, petitioner was not an employee of NUS. Petitioners do not cite any case law or statute to support this position. We believe, however, that petitioners have in mind the provisions of section 117. Section 117(a) excludes from gross income "any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii)". The term "qualified scholar
return and then deducted the same amount on line 22 of the return to arrive at their total income for the year. Petitioner contends that the $15,846 (rounded) he received from the University in 1992 was a "stipend" excludable from income pursuant to section 117. In particular, petitioner posits the following: Code Section 117 changed effective August 17, 1986, but Proposed Regulation 1.117-6(f)(3) provides that in the event a person is receiving a stipend prior to August 17, 1986 and continuousl
The issues for our consideration are whether amounts received by petitioner qualify as a fellowship grant excludable from income under section 117 and whether petitioner is liable for the additions to tax stated above.
Per capita distributions made under the Per Capita Act of 1983 are exempt from Federal and State tax. R sec. 117b(a) (referencing the Act ofOct. 19, 1973, Pub. L. No. 93-134, sec. 7, 87 Stat. at 468). However, not all per capita distributions qualify for the Per Capita Act's tax exemption; the funds must come from approved sources and be
Per capita distributions made under the Per Capita Act of 1983 are exempt from Federal and State tax. R sec. 117b(a) (referencing the Act ofOct. 19, 1973, Pub. L. No. 93-134, sec. 7, 87 Stat. at 468). However, not all per capita distributions qualify for the Per Capita Act's tax exemption; the funds must come from approved sources and be
Section 117(a) provides that "[g]ross income does not include any amounts received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization". To be a "qualified scholarship" the amount received by the individual must be "a scholarship or fellowship grant" used only for "qualified tuition a
Section 117 Exclusion Gross income includes "all income from whatever source derived". Sec. 61(a). The scope ofsection 61(a) is broad, and exclusions from income are narrowly construed. See Commissioner v. Schleier, 515 U.S. 323, 328 (1995); - 9 - United States v. Burke, 504 U.S. 229, 248 (1992); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 4
at 281. See also Hill, 506 U.S. at 555 n.6 (noting that some - 22 - [*22] ofthe text in section 263(a)(1) has "one ofthe longest lineages ofany provision in the Internal Revenue Code"). 3. Former Section 189 Congress eventually supplemented section 263(a)(1) with former section 189.8 Former section 189, which was added to the Co
For this purpose, the term "tax-free educational assistance" means (1) a qualified scholarship that is excludable from income under section 117; (2) a veterans' or member ofthe armed forces' educational assistance allowance under 4The American Opportunity Tax Credit is a modified version ofthe Hope Scholarship Credit.
at 36. The current regulations governing the contents ofthese information returns were promulgated in June 1971. T.D. 7122, 1971-2 C.B. 393. In 1993, when Congress enacted section 170(f)(8), the requirement that charities file annual information returns on Form 990 was well established and familiar to all concerned. IfCongress ha
at 281. See also Hill, 506 U.S. at 555 n.6 (noting that some - 22 - [*22] ofthe text in section 263(a)(1) has "one ofthe longest lineages ofany provision in the Internal Revenue Code"). 3. Former Section 189 Congress eventually supplemented section 263(a)(1) with former section 189.8 Former section 189, which was added to the Co
at 281. See also Hill, 506 U.S. at 555 n.6 (noting that some - 22 - [*22] ofthe text in section 263(a)(1) has "one ofthe longest lineages ofany provision in the Internal Revenue Code"). 3. Former Section 189 Congress eventually supplemented section 263(a)(1) with former section 189.8 Former section 189, which was added to the Co
te successor liability and the exceptions to the rule are generally applied regardless of whether the predecessor or successor organization was a corporation or some other form of business organization.’” (quoting 63 Am. Jur. 2d, Products Liability, sec. 117 (1984))). A. Application of Federal Common Law Respondent argues that because the uniform imposition and collection of employment taxes is a significant Federal interest, we should disregard State law and adopt the broader parameters of Fede
es. Def. Council, Inc., 467 U.S. 837, 842-843 (1984)); cf. Shea Homes, Inc. & Subs. v. Commissioner, 142 T.C.60, 98 n.18 (2014). Cf. Lawinger v. Commissioner, 103 T.C. 428, 435 (1994) (discussing the definition of “attributable to” in the context of sec. 117(m) of the Internal Revenue Code of 1954 and sec. 108(g)(2)(B) of the Internal Revenue Code of 1986). The Congressional Record reveals that Chairman Rostenkowski of the House Ways and Means Committee, when moving to suspend the rules so that
at 714-715. Moreover, the Senate Fin nce Committee was critical ofthe existing law because it taxed similar economic transactions differently and effectively provided taxpayers with an election to sell the property right ifthe resulting transaction results in a gain or extinguish th property right ifthe resulting transaction resu
at 714-715. Moreover, the Senate Finance Committee was critical of the existing law because it taxed similar economic transactions differently and effectively provided taxpayers with an election to sell the property right if the resulting transaction results in a gain or extinguish the property right if the resulting transaction
duction - 21 - shall in any case be allowed in respect of the items specified in this part”; i.e., part IX (Items Not Deductible). Section 263 is included in part IX. Section 263(a) provides, in language that dates back to the Revenue Act of 1864, sec. 117, 13 Stat. 282, see United States v. Hill, 506 U.S. 546, 556 n.6 (1993) (“section 263(a)(1) has one of the longest lineages of any provision in the Internal Revenue Code.”), that “No deduction shall be allowed for--(1) Any amount paid out for n
duction - 21 - shall in any case be allowed in respect of the items specified in this part”; i.e., part IX (Items Not Deductible). Section 263 is included in part IX. Section 263(a) provides, in language that dates back to the Revenue Act of 1864, sec. 117, 13 Stat. 282, see United States v. Hill, 506 U.S. 546, 556 n.6 (1993) (“section 263(a)(1) has one of the longest lineages of any provision in the Internal Revenue Code.”), that “No deduction shall be allowed for--(1) Any amount paid out for n
duction - 21 - shall in any case be allowed in respect of the items specified in this part”; i.e., part IX (Items Not Deductible). Section 263 is included in part IX. Section 263(a) provides, in language that dates back to the Revenue Act of 1864, sec. 117, 13 Stat. 282, see United States v. Hill, 506 U.S. 546, 556 n.6 (1993) (“section 263(a)(1) has one of the longest lineages of any provision in the Internal Revenue Code.”), that “No deduction shall be allowed for--(1) Any amount paid out for n
fy for 1 Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the year in issue, and Rule references are to the Tax Court Rules of Practice and Procedure. -- 22 -- exemption as a qualified scholarship under section 117. Petitioners resided in Owings Mills, Maryland, when the petition was filed. The facts may be summarized as follows. Michael B. Streiff (petitioner) is a medical doctor. During 1993, petitioner was engaged in a program at Johns Hopkins Univ
Even if the payments under the agreement do not constitute repayment of student loans, respondent argues they are repayments of a qualified scholarship under section 117, meaning that interest payments incurred during repayment are not deductible because they are directly related to the production of tax-exempt income and are subject to the nondeductibility limitations of section 265.
er, supra; Wood v. Commissioner, supra. By adding the phrase "to customers", Congress intended to make it - 11 - "impossible to contend that a stock speculator trading on his own account is not subject to the [capital loss limitation] provisions of section 117." H. Conf. Rept. 1385, 73d Cong., 2d Sess. (1934), 1939-1 C.B. (Part 2) 627, 632. Given its clearly stated purpose, this Court and others have used the "to customers" requirement to distinguish between securities "dealers" who are intended
Because section 402(e)(4)(C) requires that we treat the Retirement System and the Pension System as a single pension plan, we conclude that, by transferring from the Retirement System to the Pension System, petitioner did not forfeit his right to a future monthly annuity, but simply elected to receive an initial single payment t
1993-322, the Sixth Circuit Court of Appeals began its inquiry into the Treasury’s interpretation of section 117 with the following statement: The degree of deference to be accorded an agency’s interpretation of a statute Congress has charged it with administering varies, depending on several factors, including the existence of a statute mandating a standard of review, the form and formality of the interpretation, and the consistency of the agency