Final answer:
Scholarships are tax-exempt when used for A) tuition, B) fees, and required C) books, but not for housing.
Step-by-step explanation:
Scholarships may be excluded from gross income if they are used for certain qualified educational expenses. According to the Internal Revenue Service (IRS), scholarships are generally tax-free if you are a candidate for a degree and the scholarship is used to pay for tuition and fees required for enrollment or attendance, or for books, supplies, and equipment required for courses. Therefore, the correct options are: A) Tuition, B) Fees, and C) Books. Please note that scholarships used to pay for non-qualified expenses such as housing are considered taxable income.