Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(a), in amending section generally, substituted “Qualified scholarships” for “Scholarships and fellowship grants” in section catchline.
Cases: Bingler v. Johnson, 394 U.S. 741 (1969); Woddail v. Commissioner, 321 F.2d 721 (10th Cir. 1963)
(a) General rule Gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii).
Amended 1976, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “In the case of an individual, gross income does not include—
“(1) any amount received—
“(A) as a scholarship at an educational organization described in section 170(b)(1)(A)(ii), or
“(B) as a fellowship grant, including the value of contributed services and accommodations; and
“(2) any amount received to cover expenses for—
“(A) travel,
“(B) research,
“(C) clerical help, or
“(D) equipment,
which are incident to such a scholarship or to a fellowship grant, but only to the extent that the amount is so expended by the recipient.”
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(8)(A), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution (as defined in section 151(e)(4))” after “scholarship at an”.
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(b) Qualified scholarship For purposes of this section—
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(a), in amending subsec. (b) generally, substituted qualified scholarship provision for former limitations provision, which related in par. (1) to individuals who were candidates for degrees, and in par. (2) to individuals who were not candidates for degrees, describing in subpar. (A) conditions for exclusion and in subpar. (B) extent of exclusion, such detailed provision now covered in subsec. (c).
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(1) In general The term “qualified scholarship” means any amount received by an individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses.
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(8)(A), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution (as defined in section 151(e)(4))” after “scholarship at an”.
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(2) Qualified tuition and related expenses For purposes of paragraph (1), the term “qualified tuition and related expenses” means—
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(8)(A), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution (as defined in section 151(e)(4))” after “scholarship at an”.
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(A) tuition and fees required for the enrollment or attendance of a student at an educational organization described in section 170(b)(1)(A)(ii), and
Amended 1961, 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(c)(3), struck out “a territory” after “or a State”.
- 1961 Pub. L. 87-256 Pub. L. 87–256 included cases where the grantor of the scholarship or fellowship grant is a foreign government, an international organization, or a binational or multinational educational and cultural foundation or commission created or continued pursuant to the Mutual Educational and Cultural Exchange Act of 1961.
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(B) fees, books, supplies, and equipment required for courses of instruction at such an educational organization.
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(8)(A), substituted “educational organization described in section 170(b)(1)(A)(ii)” for “educational institution (as defined in section 151(e)(4))” after “degree at an”.
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(c) Limitation
Amended 1980, 1986, 2001
- 2001 Pub. L. 107-16 Pub. L. 107–16 designated existing provisions as par. (1), inserted par. heading, substituted “Except as provided in paragraph (2), subsections (a)” for “Subsections (a)”, and added par. (2).
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(a), in amending subsec. (c) generally, substituted limitation provision for former provision relating to Federal grants for tuition and related expenses not includable merely because there was requirement of future service as Federal employee.
- 1980 Pub. L. 96-541 Pub. L. 96–541 added subsec. (c).
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(1) In general Except as provided in paragraph (2), subsections (a) and (d) shall not apply to that portion of any amount received which represents payment for teaching, research, or other services by the student required as a condition for receiving the qualified scholarship or qualified tuition reduction.
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(2) Exceptions Paragraph (1) shall not apply to any amount received by an individual under—
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(A) the National Health Service Corps Scholarship Program under section 338A(g)(1)(A) of the Public Health Service Act,
(B) the Armed Forces Health Professions Scholarship and Financial Assistance program under subchapter I of chapter 105 of title 10, United States Code, or
(C) a comprehensive student work-learning-service program (as defined in section 448(e) of the Higher Education Act of 1965) operated by a work college (as defined in such section).
Amended 2015
- 2015 Pub. L. 114-113 Pub. L. 114–113 added subpar. (C).
(d) Qualified tuition reduction
Amended 1984, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 123(a), in amending subsec. (d) generally, substituted “reduction” for “reductions” in heading and inserted “(within the meaning of section 414(q))” after “highly compensated employees” in par. (3).
- 1984 Pub. L. 98-369 Pub. L. 98–369 added subsec. (d).
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(1) In general Gross income shall not include any qualified tuition reduction.
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(2) Qualified tuition reduction For purposes of this subsection, the term “qualified tuition reduction” means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(1)(A)(ii) for the education (below the graduate level) at such organization (or another organization described in section 170(b)(1)(A)(ii)) of—
(A) such employee, or
(B) any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132(h).
Amended 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188 substituted “section 132(h)” for “section 132(f)”.
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(3) Reduction must not discriminate in favor of highly compensated, etc. Paragraph (1) shall apply with respect to any qualified tuition reduction provided with respect to any highly compensated employee only if such reduction is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees (within the meaning of section 414(q)). For purposes of this paragraph, the term “highly compensated employee” has the meaning given such term by section 414(q).
Amended 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1114(b)(2), struck out “officer, owner, or” after “with respect to any” and “officers, owners, or” after “in favor of” and inserted at end “For purposes of this paragraph, the term ‘highly compensated employee’ has the meaning given such term by section 414(q).”
[(4) Repealed. Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830]
Amended 1986, 1988, 1989
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(2), amended par. (4) to read as if amendments by Pub. L. 100–647, § 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below.
- 1989 Pub. L. 101-140 Pub. L. 101–140, § 203(a)(1), amended subsec. (d) to read as if amendments by Pub. L. 99–514, § 1151(g)(2), which added par. (4), had not been enacted, see 1986 Amendment note below.
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 1011B(a)(31)(B), substituted “there shall” for “there may” and “who are” for “who may be”.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1151(g)(2), added par. (4).
(5) Special rules for teaching and research assistants In the case of the education of an individual who is a graduate student at an educational organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization, paragraph (2) shall be applied as if it did not contain the phrase “(below the graduate level)”.
Amended 1988
- 1988 Pub. L. 100-647 Pub. L. 100–647, § 4001(b)(2), added par. (5).