Question

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for?

1) Meals and lodging.
2) Tuition, books, supplies, meals, and lodging.
3) Only tuition.
4) Tuition, books, and supplies.
5) None of these choices are correct.

Answer 1

Only the amounts used for tuition, books, and supplies from a scholarship can be excluded from gross income; amounts used for meals and lodging cannot be.

Step-by-step explanation:

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for tuition, books, and supplies. Options such as payments made for meals and lodging are not excludable from gross income in the context of scholarship proceeds according to IRS guidelines. Therefore, the accurate answer is that a scholarship can cover 4) Tuition, books, and supplies without being included in the student's gross income.