Exclusions from Gross Income: Scholarships/Loans

Question 1

Scholarships

Answer 1

Excludable for tuition, fees, book supplies

Taxpayer must be degree candidate

CANNOT BE PAYMENT FOR SERVICES: sports scholarships is exempt

Question 2

Loans

Answer 2

Receipt of loan is not gross income

Question 3

Discharge of Indebtedness

Answer 3

Is gross income and it will be determined by difference between amount owed and amount paid.

Question 4

Exception to Discharge of Indebtedness

Answer 4

Forgiveness of loan is a gift, adjustment of purchase price of property, forgiveness of debt used to buy taxpayer’s principal residence, Forgiveness of student loans for public interest work, Borrower is insolvent