Final answer:
A scholarship must meet specific criteria to be considered a gift and excluded from gross income. If it does not meet these criteria, the scholarship is considered taxable income, making the statement true.
Step-by-step explanation:
The content loaded statement, If a scholarship does not satisfy the requirements for a gift, the scholarship must be included in gross income, is generally considered
A. True. In the U.S. tax code, a scholarship is considered a gift and is excluded from taxable income only if it meets certain criteria. These criteria typically involve the scholarship being used for tuition and educational expenses, and not requiring services like teaching or research in return. If these conditions are not met, then the scholarship money is indeed treated as taxable gross income. This is to ensure that the scholarship serves the purpose of promoting education rather than acting as compensation for services.
A scholarship is generally considered tax-free if it meets the requirements for a gift, which means it must be given by a person rather than an organization or institution, and is used for educational expenses such as tuition and books.
However, if a scholarship does not satisfy these requirements and is instead given by an organization or institution for services rendered or to fund research or other non-educational activities, it must be included in gross income and is subject to taxation.