Question

Helen Troy, a student seeking a Master's degree in acct, was awarded a 50% scholarship to grad school (valued $3000) and a $6000 per yr teaching assistantship (not required of Master's level students). She also, because of her great beauty, won first prize in the Miss Int. Beauty Pageant. The price included $14K in cash, a $25K car, a $10K scholarship, and travel exp. relating to the pageant. What she include in gross income?

Answer 1

Helen Troy should include the value of her scholarship, assistantship, and pageant prizes in her gross income for tax purposes.

Step-by-step explanation:

In this scenario, Helen Troy, a student seeking a Master's degree in accounting, has received several types of income which may be included in her gross income for tax purposes. The types of income she received include:

1. The 50% scholarship to grad school, valued at $3000. This scholarship is taxable income as it is not used for qualified education expenses.
2. The teaching assistantship of $6000 per year. This income is also taxable.
3. The prizes from winning the Miss International Beauty Pageant, including $14,000 in cash, a $25,000 car, a $10,000 scholarship, and travel expenses. These prizes are taxable as well.

Therefore, Helen should include the total value of the scholarship, assistantship, and pageant prizes in her gross income for tax purposes.