Scholarships and fellowships 452.5 Athletic. The value of athletic scholarships, which may not exceed expenses for tuition, fees, room, board, and necessary supplies, awarded to students by a university that expects but does not require to students to participate in a particular sport, requires no particular activity in lieu of participation, and does not cancel the scholarship if the student cannot participate is excludible from the recipient’s gross income under section 117. §§1.61–1, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 77-263, 1977-2 C.B. 47. 452.6 Award with civil service appointment. Amounts received by the recipient of an award, which carried with it an appointment to an officially established position as a civil service employee of the U.S. Government, are not amounts received as a fellowship grant, but such amounts are includable in gross income and subject to income tax withholding. §§1.61-2, 1.117-4. (Secs. 61, 117, 3402; ’86 Code.) Rev. Rul. 58-322, 1958-1 C.B. 59. 452.7 Baseball player; college scholarship plan. Amounts paid to a college on behalf of a professional baseball player pursuant to a baseball club’s “College Scholarship Plan” are not excludable from gross income as a scholarship. Such amounts are wages subject to the FICA, FUTA, and withholding of income tax; modified by Rev. Rul. 71-532 to provide that the provisions relating to wages will not be applied with respect to wages paid prior to January 1, 1970. §1.117-4. (Secs. 117, 3121, 3306, 3402; ’86 Code.) Rev. Rul. 69-424, 1969–2 C.B. 15. 452.8 Beauty contest winner. The winner of a national beauty contest and pageant contracts with the corporation conducting the contest to furnish Scholarships and her services to the corporation for one year. Prizes fellowships and awards she receives from the corporation, including a scholarship, amounts paid for personal 452.1 Accounting profession. An exempt appearances. and cash allowances are income subfoundation’s faculty assistance awards, received ject to withholding, except to the extent that such by accounting instructors who are candidates for amounts qualify as reimbursements for traveling higher degrees, are excludable from gross income expenses or business expenses of the corporation. as scholarships or fellowships subject to the Further, items received from various manufacturlimitations of section 117(b)(1) Scholastic ers (not related to her contract with the corporaawards, received from the foundation by students tion) are includible in gross income. §§1.61–2, who are annually selected by certain colleges and 1.74-1, 1.117-4. (Secs. 61, 74, 117; ’86 Code.) universities for their academic excellence in Rev. Rul. 68–20, 1968–1 C.B. 55. accounting, are not excludable from gross income as prizes or awards but are excludable scholar- 452.9 Benefit of grantor; employee on educaships. §§1.74–1, 1.117–2. (Secs. 74, 117; ’86 tional leave. Payments received by an employee Code.) while on “educational leave” from his job to seek Rev. Rul. 66–241, 1966-2 C.B. 40. further education and advance training under his employer’s fellowship and doctoral programs are 452.2 Additional amounts for dependents. taxable compensation rather than excludable The entire amount of a fellowship grant received scholarships where such payments are based by a taxpayer who is not a candidate for a degree partly on need, family size, and prior earnings of must be included in his gross income to the extent the employee; the employee retains his seniority that it exceeds the exclusion allowable, irrespec- status; receives all employee benefits; study topics tive of the fact that the amount of such grant may have to relate generally to employer’s work; the be greater where the recipient has dependents. employer treats the payments as indirect labor or (Sec. 117, ’86 Code.) overhead; and the employee is obligated to return Rev. Rul. 55-554, 1955-2 C.B. 36. to his job for at least two years following completion of the educational leave. §1.117-4. (Sec. 117, 452.3 Alcoholism counselor trainees; city ’86 Code.) health department. Amounts paid by a city Johnson, 394 U.S. 741, Ct. D. 1926, 1969-2 health department to alcoholism counselor train- C.B. 17. ees are excludable fellowship grants to the extent provided in section 117(b)(2)(B). §1.117-3. (Sec. 452.10 Benefit of grantor; employee on 117, ’86 Code.) educational leave. Monthly payments a state public welfare department makes to its employees Rev. Rul. 69-604, 1969-2 C.B. 14. while on educational leave to pursue job-related 452.4 American Heart Association; investi- training, with the employees obligated to return to gatorship awards. Amounts paid by the Ameri- the public welfare program for a minimum period can Heart Association as Established Investigator- of service, are not excludable from gross income ship Awards under its program for the support of as scholarships. However, tuition fees the departresearch in the field of cardiovascular function and ment pays directly to a university for the disease are not excludable from the recipients’ employees are not includible in gross income and gross income as scholarships or fellowship grants. the employees may deduct amounts paid for books, travel, and incidental expenses related to §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) the education. Distinguished by Rev. Rul. 76-352. Rev. Rul. 71-379, 1971-2 C.B. 100.

Scholarships and fellowships §§1.61-1, 1.117-4, 1.162-5. (Secs. 61, 117, 162; ’86 Code.) Rev. Rul. 76-65, 1976-1 C.B. 46.

dered and are wages subject to income tax withholding. §1.117-4. (Sec. 117, 3402; ’86 Code.) Rev. Rul. 73-218, 1973-1 C.B. 53.

452.11 Benefit of grantor; incidental benefit. A grant to a student for the primary purpose of enabling him to complete his doctoral degree, with the student under no commitment to the grantor as to the course or subject matter of his research or thesis, is excludable from his gross income, notwithstanding the fact that the grantor may derive some benefit from the research and dissertation. §1.117-2. (Sec. 117, ’86 Code.) Rev. Rul. 56-419, 1956-2 C.B. 112.

452.18 Department of Health, Education, and Welfare. Stipends received from institutions of higher education for attending counseling and guidance training and language development institutes provided by those institutions by using funds received from the Department of Health, Education, and Welfare are scholarships or fellowship grants. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 62–205, 1962-2 C.B. 43.

452.12 Benefit of grantor; stipend dependent on subsequent employment. In the light of the Supreme Court decision in Johnson stipends, conditioned upon future employment, will not be considered excludable scholarships. This Revenue Ruling will not be applied to stipends received prior to June 30, 1970. Rev. Rul. 65–146 revoked. §§1.117-4, 301.7805-1. (Secs. 117, 7805; ’86 Code.) Rev. Rul. 70-283, 1970-1 C.B. 26; Aileene Evans, 34 T.C. 720, Nonacq., 1970-1 C.B. xvii. 452.13 Congressional intern program. Funds solicited by a U.S. Congressman for his intern program, designed to provide education and training in governmental functions and legislative processes to selected individuals who spend a part of their time in the Congressman’s office performing the same services as his compensated staff, are not excludable gifts, but are includible in his gross income for the year received, and he may deduct the amount he pays to the interns under section 162. The funds received by the interns are not excludable scholarships for fellowship grants, but must be included in their gross income as compensation received for services performed. §§1.61-1, 1.102-1, 1.117-2, 1.162-1. (Secs. 61, 102, 117, 162; ’86 Code.) Rev. Rul. 75-146, 1975–1 C.B. 23. 452.14 Contest prize designated as scholarship. A prize awarded by a business firm, although designated a scholarship but not required to be used for educational purposes, is includable in the recipient’s gross income. §§1.74-1, 1.117-3. (Secs. 74, 117; ’86 Code.) Rev. Rul. 65–58, 1965-1 C.B. 37. 452.15 Corporate grant to former studentemployee. A cash award granted on a competitive basis by a corporation to a former employee to assist him in pursuing his education at college qualifies as a scholarship where the recipient of the award incurred no obligation to render future services to the corporation by accepting the award. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 59-191, 1959-1 C.B. 40. 452.16 Deduction for educational expenses. Veterans and other students may not deduct educational expenses, and ministers may not deduct interest and taxes paid on a personal residence, to the extent the amounts expended are allocable to tax-exempt income. Rev. Ruls. 62–212 and 62-213 revoked. §§1.107-1, 1.117-1, 1.162-1, 1.163–1, 1.164-1, 1.265–1, 301.7805–1. (Secs. 107, 117, 162, 163, 164, 265, 7805; ’86 Code.) Rev. Rul. 83–3, 1983–1 C.B. 72. 452.17 Degree candidate; required work program. Amounts received by students who, as a condition to receiving Bachelor of Science Degrees, are required to participate in a university designated work-term period under the supervision and direction of the employers for whom they perform services, are not excludable as scholar ships or fellowship grants, but are includible in gross income as compensation for services ren-

tors Program are compensation for services and are not excludable from gross income as fellowship grants. (Sec. 117, ’86 Code.) Rev. Rul. 56-101, 1956–1 C.B. 89. 452.26 Exclusions from gross income. Guidance is provided relating to the exclusion of scholarship and fellowship grants under section 117 of the Code as amended by the Tax Reform Act of 1986. Notice 87-31, 1987-1 C.B. 475.

452.27 Expense allowance; incidental to fellowship grant. A fellowship supply allowance 452.19 Domestic Volunteer Service Act; sti- made available to an education institution on pend. A stipend received by a full-time student behalf of a fellowship recipient, to cover the recipenrolled for a period of at least one year in the Uni- ient’s expenses of travel, research, and equipment versity Year for Action program provided for by incident to his fellowship, is excludable from the the Domestic Volunteer Service Act of 1973 is not recipient’s gross income and is not includable in excludable from the recipient’s gross income as a computing the $300 limitation. Rev. Rul. 67–85 scholarship or fellowship grant, but is compensa- distinguished. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 71-344, 1971-2 C.B. 94. tion for services performed as an employee of the U.S. §§1.61-1, 1.117-4. (Secs. 61, 117; ’86 452.28 Expenses of training fellowship recipi. Code.) ent. An additional amount made available to an Rev. Rul. 75–209, 1975-1 C.B. 50. educational institution by the grantor of a fellow452.20 Education Professions Development ship award for expenses incurred in the training of Act; teacher “consultants”; State training pro- the recipient of the award is considered to be in the gram. Amounts paid to teacher “consultants” by nature of tuition and, as such, is part of the recipia State from funds provided under the Education ent’s fellowship grant. The total amount of the Professions Development Act to attend the State’s award granted, including the additional amount, is in-service training program to improve methods excludable from the recipient’s gross income, subto the $300 limitation. Distinguished by Rev. of instructions in public schools are not excludable ject scholarships or fellowship grants, but represent Rul. 71-344. §1.117–3. (Sec. 117, ’86 Code.) Rev. Rul. 67-85, 1967-1 C.B. 25. compensation for services. §1.117-4. (Sec. 117, ’86 Code.) 452.29 Fulbright and Smith-Mundt Acts. Rev. Rul. 70-518, 1970-2 C.B. 20. Amounts received for study and research abroad, under the Fulbright Act and the U.S. Information 452.21 Educators and change-agent interns; and Educational Exchange Act of 1948, by U.S. State educational project. Amounts received by citizens who are degree candidates are wholIy teams of educators and change-agent interns par- excludable from gross income. Amounts received ticipating in a State educational agency’s project, by non-degree candidates are excludable to the financed under Title III of the Elementary and Sec- extent provided by section 110. Amounts ondary Education Act of 1965, are not excludable for lecturing or teaching abroad are compensation as scholarships or fellowship grants. §1.117-4. for services rendered and are includable in gross (Sec. 117, ’86 Code.) income. §§1.61–2, 1.117–1. (Secs. 61, 117; ’86 Rev. Rul. 71-380, 1971-2 C.B. 101. Code.) Rev. Rul. 61-65, 1961-1 C.B. 17. 452.22 Employee; attendance at corporation’s institute. Amounts received by an individ- 452.30 Fulbright and Smith-Mundt Acts; lecual from his employer while attending an institute turer in foreign university. Amounts received by under which his employer cooperates are not an American citizen, under the so-called Fulbright scholarship within the meaning of sections 117 or and Smith-Mundt Acts, to lecture at a foreign uni152. They are considered to be compensation. versity are not scholarship or fellowship grants but §1.117-1. (Sec. 117, ’86 Code.) represent compensation for services includable in Rev. Rul. 57-484, 1957–2 C.B. 113. gross income. The value of transportation furnished in kind and any cash advanced to cover 452.23 Employee; tuition fees paid or reim- transportation expenses are also includable in bursed by employer. Amounts an employer pays gross income. However, traveling expenses, as tuition reimbursements to employees enrolled, including meals and lodging on the round trip to with the approval of their supervisor, in educa- and from the university and during his stay there tional courses that will be beneficial to a career in are deductible. §§1.61–2, 1.62–1, 1.117–1, the employer’s business are income to the 1.162-1, 1.262-1, 1.911–1. (Sees. 61, 62, 117, employees and do not qualify as scholarships. 262, 911; ’86 Code.) However, the amounts are considered business Rev. Rul. 62-2, 1962–1 C.B. 9. expenses of the employees and need not be reported. Distinguished by Rev. Rul. 76–352. 452.31 Graduate assistantship; teaching §§1.117-4, 1.162-17. (Secs. 117, 162, 3121, requirement. Taxpayer received stipends under a 3306, 3401; ’86 Code.) graduate assistanceship; program requiring him to Rev. Rul. 76-71, 1976-1 C.B. 308. perform academic services required of all degree candidates including lecturing, laboratory pro452.24 Engineering students; work-study grams, and classroom instruction under the superprogram. Amounts paid to undergraduate stu- vision of a faculty member who graded him and dents by approved engineering companies that reported on his performance. Held, the stipends provide training for such students in cooperation are excludable scholarships rather than compensawith a university’s engineering program are not tion for services. (Sec. 117, ’86 Code.) excludable scholarship or fellowship grants but Robert Henry Steiman, 56 T.C. 1350, Acq., are compensation for services rendered. §1.117-4. 1971-2 C.B. 3. (Sec. 117, ’86 Code.) 452.32 Grant to complete unfinished novel. Rev. Rul. 72-607, 1972-2 C.B. 82. An award granted by the National Foundation on 452.25 Exchange Visitors Program; hospital the Arts and Humanities to a writer for the purpose trainees. Stipends received by Filipino nationals of completing his novel that is in process is not an as trainees, interns, and resident doctors in a train- award excludable under section 74 but is a fellowing hospital in the U.S. under the Exchange Visi- ship grant excludable to the extent provided in sec-

Scholarships and fellowships 452.40 Interns and resident physicians; National Labor Relations Board ruling. The National Labor Relations Board’s ruling that hospital interns and resident physicians are students 452.33 Grant to specific faculty member. rather than employees for labor relations purposes Where an individual transfers an amount of money is not binding in cases arising under the Code. to a university to be disbursed by it to a teacher, a §1.117-4. (Sec. 117, ’86 Code.) Rev. Rul. 78-54, 1978-1 C.B. 36. non-degree candidate, specifically designated by the donor to enable the teacher to engage in independent research, such amount is not excludable 452.41 Job training allowances. Weekly as a fellowship grant. However, such amount is allowances in excess of allowances provided under the Manpower Development Training Act, excludable as a gift. §§1.102–1, 1.117–1. (Secs. received by construction union members from a 102, 117; ’86 Code.) tax-exempt trust fund established under a collecRev. Rul. 61-66, 1961-1 C.B. 19. tive bargaining agreement financed by contractor creative writers. contributions to provide training in construction 452.34 Grants-in-aid; Grants-in-aid made by an exempt foundation to skills, are not excludable from the gross incomes selected creative writers including novelists, of the recipients as scholarships or fellowship poets, and playwrights, enabling them to pursue grants. §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 their artistic talents, are not gifts excludable under Code.) Rev. Rul. 77-177, 1977-1 C.B. 316. section 102 but are excludable fellowship grants subject to the limitations of section 117(b)(2). 452.42 Law course expenses paid by §§1.61-2, 1.102-1, 1.117-1. (Secs. 61, 102, 117; employer. Amounts a government agency pays to ’86 Code.) a correspondence school for employees’ job-reRev. Rul. 72-168, 1972-1 C.B. 37. lated law courses, leading to a degree but not entitling them to sit for any State Bar Examination, are 452.35 Hospital administrative residents. noncompensatory business expenses for the Amounts paid out of hospital funds to student-em- agency and are not includable in the employees’ ployees serving one year at the hospital as admin- gross income. However, amounts paid to reimistrative residents as a condition to receiving the burse employees for expenses incurred in taking degree of Master of Hospital Administration from job-related evening law school courses, the a university constitute compensation for services completion of which with other courses not job-reand are includable in gross income and subject to lated leads to a degree and entitles them to sit for income tax withholding. Amplified by Rev. Rul. bar examinations, are includable in the employees’ 73-255.§1.117-4. (Secs. 61, 117; ’86 Code.) gross income. Distinguished by Rev. Rul. 76-352. Rev. Rul. 57-385, 1957-2 C.B. 109. §§1.61-1, 1.117-4, 1.162-5. (Secs. 61, 117, 162; ’86 Code.) 452.36 Hospital administrative residents. Rev. Rul. 76-62, 1976-1 C.B. 12. Amounts received from a hospital by a university student, a candidate for the degree of Master of 452.43 Leadership fellows award. Amounts Hospital Administration, who, as a condition to received from an exempt educational fund as a “leadership fellows award” to train school offireceiving the degree, is required to serve a oneyear internship as an administrative resident, are cials in economically disadvantaged rural counnot excludable from gross income as a scholarship ties are amounts received as a scholarship or felor fellowship grant. Rev. Rul. 57–385 amplified. lowship grant and are excludable from gross income. §1.117–1. (Sec. 117, ’86 Code.) §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 69-472, 1969-2 C.B. 13. Rev. Rul. 73–255, 1973–1 C.B. 54. tion 117(b)(2). §§1.74–1, 1.117–1. (Secs. 74, 117; ’86 Code.) Rev. Rul. 72-163, 1972-1 C.B. 26.

452.37 Internal Revenue Service Scholarship Program. The Internal Revenue Service Scholarship Program is a work-study program for internal revenue agent trainees that usually selects disadvantaged high school seniors who intend to major in accounting at a college or university and who agree to work for the Service for at least two years after graduation. The amounts the Service pays for the educational expenses of the participants in the program, including travel and per diem, are not excludable from their gross incomes either as unemployment benefits or as scholarships or fellowship grants and are not deductible by the participants as educational expenses. §§1.61–1, 1.117-4, 1.162-5. (Secs. 61, 117, 162, 3402; ’86 Code.) Rev. Rul. 76-230, 1976-1 C.B. 19.

452.44 MEDEX program; trainees at medical school. Amounts received by former military medical corpsmen as trainees under the MEDEX program at a medical school of a State educational institution, are excludable from gross income. (Sec. 117, ’86 Code.) Rev. Rul. 71–378, 1971–2 C.B. 95.

gram, performs services of value for the hospital’s benefit do not qualify as a scholarship or fellowship grant. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 73-89, 1973-1 C.B. 52. 452.48 Mellon Fellowship. Amounts received by a graduate student under an Andrew Mellon Fellowship Grant to enable the recipient to devote full time to obtaining a Ph.D. degree are excludable from gross income as a scholarship or fellowship grant. §1.117–1. (Sec. 117, ’86 Code.) Rev. Rul. 73-88, 1973-1 C.B. 52. 452.49 Military personnel. Rev. Ruls. 76-99, 76-518, and 76–519 are modified to remove the implication that all regular pay and allowances received by military participants in certain health, medical, dental, and veterinary scholastic programs are includible in gross income. §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 77-438, 1977-2 C.B. 49. 452.50 Military personnel. Payments received by military personnel as participants in the Armed Forces Health Professions Scholarship Program, the Medical, Dental, and Veterinary Education Program for Air Force Officers, or the Navy Medical and Osteopathic Scholarship Program, for educational expenses are excludable from gross income as scholarships for years 1973 through 1975, and similarly, for years 1976 through 1979, by those participating in the program in 1976; however, regular pay and allowances received while on active duty are includable in gross income unless otherwise excluded by law. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 76-99, 1976-1 C.B. 40; Rev. Ruls. 76-517, 76-518, 76-519, 1976-2 C.B. 14, 15; Rev. Rul. 77-438, 1977-2 C.B. 49. 452.51 Ministerial interns and residents at hospitals. Amounts paid by a hospital to ministerial interns and residents participating in a program that provides advanced training in pastoral care and offers spiritual ministry to hospital patients are not excludable scholarship or fellowship grants but represent compensation for services. Distinguished by Rev. Rul. 74-186. §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 70-648, 1970-2 C.B. 21.

452.52 National Defense Education Act. A stipend received under Title IV of the National Education Act of 1958 constitutes a scholarship grant and should be disregarded in determining whether the recipient’s parent provided more than one-half of the recipient’s support. However, that 452.45 Medical; nurse practitioner project. part of the stipend used by the recipient for the supAmounts paid to or on behalf of nurses in connec- port of his wife and children should be considered tion with training in a family nurse practitioner in determining whether the parent is entitled to a project, developed with Federal grants by Iowa dependency exemption for furnishing more than health care organizations that expected the nurses one-half of the support of the recipient’s wife and to work as physician extenders in satellite clinics children. §§1.117–3, 1.151–2, 1.152–1. (Secs. in rural areas after the training period, are consid- 117, 151, 152; ’86 Code.) ered grants made primarily for the benefit of the Rev. Rul. 61-53, 1961-1 C.B. 21. grantor and are not excludable from the nurses’ gross income as scholarships or fellowship grants. 452.53 National Defense Education Act; research project. Amounts received by persons §§1.61-1, 1.117-4. (Secs. 61, 117; ’86 Code.) 452.38 Interns and resident physicians. Stiproviding services in connection with a research Rev. Rul. 76-122, 1976-1 C.B. 42. pends received by interns and resident physicians project supported by a grant made under Title VII performing services at a medical training hospital 452.46 Medical school professor. Funds of the National Defense Education Act of 1958 are in order to complete or receive specialized training received by the taxpayer from an exempt charita- not excludable from gross income of the recipients are not excludable scholarships or fellowships but ble organization, the purpose of which was “to as scholarships or fellowship grants, but are comrepresent compensation for services rendered. improve medical research and education by assist- pensation for services rendered. §§1.61-2, Amplified by Rev. Rul. 72-469.§1.117–1. (Secs. ing promising young teachers and investigators” 1.117-4. (Secs. 61, 117; ’86 Code.) 61, 117; ’86 Code.) and that were conditioned upon taxpayer’s being Rev. Rul. 61-174, 1961-2 C.B. 28. Rev. Rul. 57-386, 1957-2 C.B. 107. a full-time member of medical school faculty, qualified for exclusion as a fellowship grant. (Sec. 452.54 National Endowment for the Humanities. Amounts received by a junior college profes452.39 Interns and resident physicians. 117, ’86 Code.) sor, not a candidate for a degree, from the National Amounts paid to interns and resident physicians Clarence Peiss, 40 T.C. 78, Acq., 1968-2 C.B. Endowment for the Humanities for the purpose of by a hospital operated in conjunction with a state studying the methods employed by a foreign unimedical school are compensation for services and trainees. versity in teaching languages, under a grant technologist are not excludable from gross income as scholar- 452.47 Medical ship or fellowship grants. §1.117-4. (Sec. 117, ’86 Amounts received from a hospital under a medical reserving to the grantor a nonexclusive license to technologist training program by a university use and reproduce for government use any pubCode.) degree candidate who, while enrolled in the pro- lishable matter arising out of the professor’s actiRev. Rul. 68-520, 1968-2 C.B. 58.

Scholarships and fellowships vities, are not excludable from his income as a scholarship or fellowship grant. Distinguished by Rev. Rul. 76-351. §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 74-95, 1974-1 C.B. 39. 452.55 National Endowment for the Humanities. Amounts granted a college professor, not a candidate for a degree, from the National Endowment for the Humanities for a two-month study on the interaction of the sciences and literature, with a view toward writing a book in which the grantor retains no publishing rights, is excludable from the recipient’s gross income as a fellowship grant. Rev. Rul. 74–95 distinguished. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 76-351, 1976-2 C.B. 34.

which required similar research of all degree candidates. (Sec. 117, ’86 Code.) Chander P. Bhalla, 35 T.C. 13, Acq., 1965-1 C.B. 4. 452.62 National Science Foundation. Stipends granted by the National Science Foundation to high school and college science teachers, including fees and allowances for incidental expenses, to attend a Summer Institute for Science sponsored by it, during the summer months of the taxable year constitute scholarships and fellowship grants. Distinguished by Rev. Rul. 60-274. §§1.61-2, 1.117-1. (Secs. 61, 117; ’86 Code.) Rev. Rul. 58-498, 1958-2 C.B. 47.

452.63 National Science Foundation; teachers using experimental text. Amounts received 452.56 National Institute of Public Affairs by teachers selected to teach mathematics to their grants. Grants made by the National Institute of students by use of experimental text material proPublic Affairs to Government employees to duced by a school mathematics study group, enable them to attend selected universities for an financially supported by the National Science academic year of study are excludable as fellow- Foundation, are not scholarships and fellowship ship grants. However, the continuing salary pay- grants but constitute compensation for services ments received are compensation for services ren- rendered. Rev. Rul. 58-498 distinguished. dered and are includible in the recipients’ gross §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) income. §1.117–1. (Sec. 117, ’86 Code.) Rev. Rul. 60-274, 1960-2 C.B. 39. Rev. Rul. 64-71, 1964-1 (Part 1) C.B. 82. 452.64 National Teacher Corps participants. 452.57 National Institutes of Health. A sti- Amounts received by participants of the National pend was paid to a physician, not a degree candi- Teacher Corps during their pre-service training date, by a medical school under a program funded and in-service periods are compensation for serby the NIH designed as graduate training in areas vices includible in the recipient’s gross income. in which the physician was not experienced, and However, amounts paid by the Office of Education stressing research with 20 to 30 percent of the time to colleges and universities on behalf of teacherto be spent on clinical activities. No present or interns are excludable from gross income as scholfuture services were required nor was research for arships. §1.117-4. (Sec. 117, ’86 Code.) the benefit of the grantor.Held, the amounts were Rev. Rul. 68-312, 1968-1 C.B. 59. excludable as a scholarship or fellowship grant. 452.65 National Teaching Fellowships. Sti(Sec. 117, ’86 Code.) Federick A. Bieberdorf, 60 T.C. 114, Acq., pends and dependency allowances received by college faculty members who are awarded 1973-2 C.B. 1. National Teaching Fellowships under Title 111 of 452.58 National Institutes of Health. Amounts Public Law 89–329, the Higher Education Act of received by an individual, not a candidate for a 1965, are not excluded from gross income. Such degree, under a fellowship grant for research pur- amounts represent compensation for services renposes and travel expenses, from the National Insti- dered and are wages subject to income tax withtutes of Health, an agency of the U.S. Govern- holding. §1.117-4. (Sec. 117, ’86 Code.) ment, are excludable from gross income. Rev. Rul. 68-146, 1968-1 C.B. 58. §1.117-2. (Sec. 117, ’86 Code.) 452.66 NATO Post-doctoral Fellowships in Rev. Rul. 58-179, 1958-1 C.B. 57. Science. The NATO (North Atlantic Treaty Orga452.59 National Institutes of Health; post- nization) Post-doctoral Fellowships in Science doctoral research. Amounts paid under a grant by administered in the U.S. by the National Science the National Institutes of Health (NIH) to a physi- Foundation qualify for the exclusion from gross cian for post-doctoral research training at a medi- income provided by section 117(a). §1.117–1. cal school is not excludable from the recipient’s (Sec. 117, ’86 Code.) gross income as a scholarship or fellowship grant. Rev. Rul. 63-19, 1963-1 C.B. 28. The payments are considered made by NIH in return for research services and a research prod- 452.67 Navy educational assistance program. uct. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Educational benefits received by the taxpayer’s minor son under the U.S. Navy’s educational Rev. Rul. 72-263, 1972-1 C.B. 40. assistance program are not excludable from the 452.60 National Institutes of Health funded son’s gross income as a scholarship where the son grants. A doctor participating in a training pro- is obligated to render the Navy services as an gram at a hospital received a stipend from funds employee for a stipulated period upon graduation. awarded the hospital by the National Institutes of The value of such benefits must be considered by Health. The doctor had no routine duties or the taxpayer in determining whether he has conresponsibilities for patient care and received no tributed more than one-half of his son’s support in employee benefits. Activities performed included order to claim a dependency exemption. research, teaching, and participating in ongoing §§1.61–1, 1.117-4, 1.151–3, 1.152-1. (Secs. 61, projects. Held, the stipend was an excludable fel- 117, 151, 152; ’86 Code.) lowship. (Sec. 117, ’86 Code.) Rev. Rul. 58-403, 1958–2 C.B. 49. George L. Bailey, 60 T.C. 447, Acq., 1973-2 452.68 Nonresident alien exchange fellow; C.B. 1. allowances. Allowances made by an exempt 452.61 National Science Foundation. Tax- foundation to a nonresident alien to cover the costs payer, a degree candidate, received a stipend from incident to his study and research as an exchange the University for doing pure research in the field fellow in the U.S. are excludable from his gross of nuclear physics under a graduate research assis- income. §1.117–1. (Sec. 117, ’86 Code.) tantship connected with a NSF grant to the UniverRev. Rul. 57-131, 1957-1 C.B. 75. sity to support such research. Held, the stipend was excludable from gross income as a scholar- 452.69 Nonresident alien in U.S.; foreign ship; the primary purpose of the research was the grantor. A stipend provided by an organization advancement of taxpayer’s training and educa- located in a foreign country to enable a nonresition, not the rendering of services for the grantor dent alien to conduct research activities in the U.S.

is considered income from sources within the U.S. The stipend is a fellowship grant for purposes of the exclusion provided by section 117(a). §§1.117-1, 1.863-1. (Secs. 117, 863; ’86 Code.) Rev. Rul. 66-292, 1966-2 C.B. 280. 452.70 Nonresident alien in U.S.; maintenance allowance. A maintenance allowance received from a U.S. business firm by a nonresident alien, a foreign university degree candidate in the U.S. during his summer vacation under an onthe-job training program intended to supplement his education but not required by the university in his native country with which the U.S. has no tax treaty, does not qualify as a scholarship or fellowship grant and is compensation for services includible in gross income. The remuneration received constitutes income effectively connected with the conduct of his trade or business in the U.S., but his “tax home” is the location of his training, and travel expenses incurred in connection with the services performed for the U.S. firm are not deductible. §§1.61-1, 1.117-4, 1.162-2, 1.873-1. (Sec. 61, 117, 162, 873; ’86 Code.) Rev. Rul. 74-453, 1974-2 C.B. 19. 452.71 Nonresident alien in U.S.; stipend and expense allowance. The basic stipend received by a nonresident alien under a fellowship grant from a university in the U.S. is excludable from his gross income under section 110 subject to the limitations of section 110. The allowance received to cover traveling expenses, of himself and family while en route to the university is excludable under section 117(a)(2) to the extent actually expended for such purposes. An expense allowance designated for anticipated expenses while attending the university is not excludable under 117(a)(2) but is considered part of the basic stipend, excludable from gross income to the extent provided by section 117(b)(2)(B). §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 71-345, 1971-2 CB. 95. 452.72 Nurses; anesthetist training program. Amounts paid to professional registered nurses enrolled in an anesthetist training program of a hospital are not excludable from gross income as scholarships or fellowship grants but are includible in their gross income. Distinguished by Rev. Rul. 72-568. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 71-106, 1971-1 C.B. 35. 452.73 Nurses; anesthetist training program. Stipends paid to student nurses enrolled in a university’s anesthetist training program in a hospital, where they are under constant supervision and perform no substantial services for the hospital, are excludable from gross income. Rev. Rul. 71-106 distinguished. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 72–568, 1972–2 C.B. 80. 452.74 Pastoral trainees at State mental health institute. Amounts received by participants in a clinical pastoral education program conducted by a State mental health institute for seminary students and ordained clergy, who learn more effective mental health principles in ministry and any services they render to the institute are incidental to their training, are excludable from gross income as scholarships or fellowship grants. Rev. Rul. 70-648 distinguished. §1.117-l. (Sec. 117, ’86 Code.) Rev. Rul. 74-186, 1974–1 C.B. 37. 452.75 Pharmacy resident; VA hospital. A student pursuing a degree of Master of Science in Pharmacy at a university medical center, and concurrently is serving as a pharmacy resident at a VA hospital under a residency program requiring 2,120 hours of work instruction under the categories of work generally carried on in a VA hospital pharmacy is performing services in connection with the operation of the hospital, and amounts he receives from the hospital during his residency are not excludable from gross income as a scholarship

Scholarships and fellowships or fellowship grant. §1.117-4. (Sec. 117, ’86 Code.) Rev. Rul. 74-474, 1974-2 C.B. 37. 452.76 Post-doctoral program; psychoanalysis. Amounts received under a grant from an educational institution by a participant in a postdoctoral program leading to certification and authorization to practice psychoanalysis are excludable from gross income to the extent provided in section 117(b)(2). §1.117–3. (Sec. 117, ’86 Code.) Rev. RuI. 72-70, 1972-1 C.B. 39. 452.77 Post-doctoral research program; funded by Health, Education and Welfare. Taxpayer held a post-doctoral fellowship at a university research program funded primarily by the Department of Health, Education and Welfare. He received a stipend from which income tax and FICA were withheld. He was not required to perform specific services for the university and did not participate in any of the research projects, but engaged in research to develop his own professional skills. Held, taxpayer was paid for doing research and studying to improve his own individual capacity, not for working as an employee, and portions of the stipend received are excludable from income. (Sec. 117, ’86 Code.) Louis C. Vaccaro, 58 T.C. 721, Acq., 1973-1 C.B. 2. 452.78 Post-doctoral training; blood bank. A stipend, competitive with local hospital salaries, paid by a metropolitan blood bank center to a physician in post-doctoral blood bank training who is also required to serve on the staffs of the blood center and cooperating hospitals with administrative and staff responsibilities, is not excludable under section 117. §§1.61–1, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 75-345, 1975-2 C.B. 48. 452.79 Private foundation; taxable expenditure. Guidelines are provided to determine whether a grant made by a private foundation under an employer-related grant program to an employee to which the program relates is a taxable expenditure or a scholarship or fellowship grant. Amplified by Rev. Proc. 77-32. Clarified by Rev. Proc. 81-65. Modified by Rev. Proc. 83-36. §§1.117-1, 53.4945-4. (Sec. 601.602, S.P.R.; Secs. 117, 4945, ’86 Code.) Rev. Proc. 76-47, 1976-2 C.B. 670. 452.80 Private foundation; taxable expenditure. Publicizing a private foundation’s employerrelated grant or loan program in the employer’s newsletter, distributed to all employees of the company, will not violate the requirements of Rev. Procs. 76-47 or 80-39 if the foundation is clearly identified as the grantor of the awards. Rev. Procs. 76-47 and 80-39 clarified. §§1.117–1, 53.4945-4. (Sec. 601.602, S.P.R.; Secs. 117, 4945, ’86 Code.) Rev. Proc. 81-65, 1981-2 C.B. 690. 452.81 Private foundation; taxable expenditure; deceased or retired employees. For purposes of sections 117(a) and 4945(g)(1), a private foundation’s scholarship program for children of deceased or retired employees of a particular company is an “employer-related grant program” to which the guidelines of Rev. Proc. 76-47 apply. §§1.117-1, 53.4945-4.(Secs. 117, 4945; ’86 Code.) Rev. Rul. 79-365, 1979-2 C.B. 186. 452.82 Private foundation; taxable expenditure; employer-related. A private foundation that was created and funded by a for-profit company grants scholarships, based on objective standards, for the education of children of a particular community, regardless of whether the parents are employed by the company. The scholar ship program is not an “employer-related” grant program

subject to the guidelines of Rev. Proc. 76-47. §§1.117-1, 53.4945-4. (Secs. 117, 4945; ’86 Code.) Rev. Rul. 79-131, 1979-1 C.B. 368. 452.83 Private foundation; taxable expenditure; scholarships and fellowships. Rules are provided under which private foundations may continue to rely on ruling letters issued prior to December 27, 1976, approving their employer-related scholarship programs. Rev. Proc. 76-47 amplified. §§53.4945-4, 301.7805-1. (Sec. 601.201, S.P.R.; Secs. 4945, 7805, ’86 Code.) Rev. Proc. 77-32, 1977-2 C.B. 541.

452.91 Qualified tuition reductions; educational assistance programs. Amounts excludable from gross income as a qualified tuition reduction under section 117(d)(1) are not subject to the $5,000 limitation of section 127(a)(2). (Secs. 117, 127; ’86 Code.) Rev. Rul. 86-69, 1986-1 C.B. 78.

452.92 Removed air traffic controllers; work-training payments. Payments made by the Department of Transportation to or on behalf of individuals, removed from their positions as air traffic controllers, for expenses incurred, in their training for other employment are not scholarships, fellowship grants, or governmental welfare 452.84 Prize won in advertising contest. A type payments and are includable in the individuprize awarded by a business firm as part of an al’s gross income. §1.61–1. (Secs. 61, 3401; ’86 advertising campaign is excludable from the gross Code.) Rev. Rul. 75-32, 1975-1 C.B. 14. income of the recipient when the prize consists of a scholarship to be used only by the winner when 452.93 Research; Japanese citizen in U.S. enrolled as a candidate for a degree at a college. Examples are set forth in which amounts paid to a §1.117-1. (Sec. 117, ’86 Code.) citizen of Japan for performing research at a heart Rev. Rul. 59-80, 1959-1 C.B. 39. research foundation in the U.S. are either comfor services rendered or payments made 452.85 Program for improved teaching of dis- pensation under a “grant, allowance, or award” within the advantaged children. Amounts received by meaning of Article 20(1) of the U.S.-Japan teachers, supervisors, and administrators from a Income Tax Convention. Rev. Rul. 76-567 superlocal board of education for participating in work- seded. Amplified by Rev. Rul. 80-98. §§1.117-4, shops to assist the local educational agency in edu- 1.894-1. (Secs. 117, 894; ’86 Code.) cating children of low income families are not Rev. Rul. 80-36, 1980-1 C.B. 366. excludable from gross income under section 117(a), but represent compensation for services 452.94 Research grant; awarded to college at rendered or to be rendered. §1.117-4. (Sec. 117, professor’s request.Amounts received by a col’86 Code.) lege professor under a research grant, obtained Rev. Rul. 67-212, 1967-2 C.B. 72. from a foundation by the college at the professor’s request for a project in which he was interested, 452.86 Promise to teach in a particular State. that permitted the foundation to indirectly restrict Grants made on an objective and nondiscrimina- and control the use of the funds and gave it the tory basis by a private foundation to worthy col- right to patents and inventions arising from lege students who acknowledge that they plan to research performed under the grant program, are teach in a particular State after graduation are not compensation for services primarily for the beneexcludable from the recipients’ gross income. fit of the grantor foundation and are not excludable §1.117-4. (Secs. 117, 4943; ’86 Code.) from the professor’s income. §§1.61-2, 1.117-4. Rev. Rul. 77-44, 1977-1 C.B. 353. (Secs. 61, 117; ’86 Code.) Rev. Rul. 73-564, 1973-2 C.B. 28. 452.87 Psychiatric trainees at State hospital; resident physicians. Amounts paid to licensed 452.95 Research grant; cancer. Grants for resident physicians under a State hospital psy- Cancer Research made by the American Cancer chiatric trainee program are not fellowships but Society to specified individuals to aid them to represent compensation for services rendered and acquire independent experience in cancer research are includible in gross income. §§1.61–2, 1.117–1. beyond that usually obtained through post-doctoral training are excludable from gross income as (Secs. 61, 117; ’86 Code.) fellowship grants and are not wages subject to Rev. Rul. 65-117, 1965-1 C.B. 67. income tax withholding. Distinguished by Rev. 452.88 Public Health and National Health Rul. 75-490. Rev. Rul. 57–127 distinguished. §1.117-2. (Sec. 117, ’86 Code.) Service Corps Scholarship Training Program. Rev. Rul. 60-130, 1960-1 C.B. 46. Tuition payments and monthly stipends received during calendar years 1973, 1974, and 1975 by 452.96 Research g r a n t ; cardiovascular. participants in the Public Health and National designated “Research Fellowship,” Health Service Corps Scholarship Training Pro- Grants gram are excludable from the recipient’s gross awarded by the American Heart Association, Inc., income as scholarships. However, in the absence to aid specified individuals in the pursuit of a of study preparatory to a career in cardioof further legislation, all amounts received after course 1975 will be includible. §§1.61–2, 1.117-4. (Secs. vascular research are excludable scholarship or fellowship grants. Further, such amounts are not 61, 117; ’86 Code.) wages subject to income tax withholding. DistinRev. Rul. 76-183, 1976–1 C.B. 43. guished by Rev. Rul. 75-490. §1.117-2. (Sec. 117, 452.89 Public health sanitarians and nurses. ’86 Code.) Rev. Rul. 58-76, 1958-1 C.B. 56. Amounts paid to sanitarians and nurses participating in a state’s department of public health in-ser- 452.97 Research grant; independent study. vice training program are compensation for ser- Amounts awarded by a science foundation to an vices and are not excludable from gross income as individual to cover salary, supplies and equipscholarship or fellowship grants. §1.117-4. (Sec. ment, and assistance, for the purpose of conduct117, ’86 Code.) ing independent research free from control and Rev. Rul. 70-220, 1970-1 C.B. 26. supervision by the grantor, are not excludable scholarship or fellowship grants but represent 452.90 Public Health Service program; compensation for personal services. Distinnurses. Awards received by students who are can- guished by Rev. Rul. 60-130 with respect to candidates for degrees and by other persons enrolled cer research grants. §1.117-4. (Sec. 117, ’86 in advanced courses of training for professional Code.) nurses at certain universities under the Public Rev. Rul. 57-127, 1957-1 C.B. 275. Health Service program are excludable from gross income, subject to the limitations provided for 452.98 Research grant; medical student. A one-year grant received for original research in a such exclusions. §1.117–1. (Sec. 117, ’86 Code.) particular field of medicine by a medical student, Rev. Rul. 57-370, 1957-2 C.B. 105.

Scholarships and fellowships who took leave of absence from school, received no academic credit for the research, was required to submit a report, was required to acknowledge the grantor’s financial support in the event the research results were published, and was not obligated to accept employment with or perform services for the grantor, is excludable from gross income as a fellowship grant. §1.117–1. (Sec. 117, ’86 Code.) Rev. Rul. 76-463, 1976-2 C.B. 35.

such purposes. Per diem allowances received must be included as part of the basic stipends. §§1.61-1, 1.117-1. (Secs. 61, 117; ’86 Code.) Rev. Rul. 76-194, 1976-1 C.B. 39.

452.106 Resident alien; research at U.S. university. Amounts received by a resident alien for conducting research at a U.S. university on a U.S. Government project are not excludable from gross income as payments under a fellowship grant. Such amounts represent compensation for ser452.99 Research grant; part-time employ- vices rendered and are wages for purposes of the ment at college. Amounts received by a professor FICA and the income tax withholding. Expenses for part-time research at a college sponsoring his incurred by the taxpayer for moving from his forparticipation in a university’s cooperative educa- mer residence to the U.S. in connection with comtional research training program leading to a doc- mencement of his work at the university are torate in education represent payment for services deductible. §§1.117-4, 1.217-1. (Secs. 117, 217; and are not excludable scholarship grants. ’86 Code.) §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 69-425, 1969-2 C.B. 16. Rev. Rul. 71-417, 1971–2 C.B. 96. 452.107 Resident physician; cancer research. 452.100 Research grant; professor on sabbat- A resident in pathology may not exclude under ical leave. The amount received from a college by section 117 the amounts, received from a society a member of its teaching staff on sabbatical leave as a clinical fellowship and a supplement from the while engaged in research in his particular field of hospital, for which the resident was required to interest does not constitute a scholarship or fel- perform additional activities, report completely to lowship grant. The amount received by such mem- the society the training received during the fellowber from a private exempt foundation while ship period, and submit to the society a related engaged in such research is excludable as a schol- paper suitable for publication. Rev. Ruls. 58-76 arship or fellowship grant. §1.117–1. (Sec. 117, and 60-130 distinguished. §§1.61–2, 1.117-4. ’86 Code.) (Secs. 61, 117; ’86 Code.) Rev. Rul. 58–222, 1958–1 C.B. 54. Rev. Rul. 75-490, 1975-2 C.B. 50. 452.101 Research grant; recipient not degree candidate. A research grant received by a recipient, not a candidate for a degree, from an exempt organization unrelated to his employer to enable him to travel, study, and consult with people in foreign countries concerning his chosen field of work was not compensation for employment services, did not benefit his employer or the grantor organization, and is excludable from the recipient’s gross income. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 74-86, 1974-1 C.B. 36. 452.102 Research grant; recipient not degree candidate. Where recipients of scholarship or fellowship grants are not candidates for degrees, the limitations prescribed in section 110 are applicable. However, such grants are not subject to the self-employment tax, FICA, FUTA, or income tax withholding. §§1.61–1, 1.117–1. (Secs. 61, 117; ’86 Code.) Rev. Rul. 60-378, 1960-2 C.B. 38. 452.103 Research grant; scientific. Amounts awarded to participants in a science foundation’s program to encourage and advance scientific investigations in the field of biology and medicine are excludable from gross income subject to limitations of section 117(b)(2). §§1.61-2, 1.117-1. (Secs. 61, 117; ’86 Code.) Rev. Rul. 71-538, 1971-2 C.B. 97. 452.104 Research stipends. A stipend received by a degree candidate who performs research for a university under its contract with the Atomic Energy Commission, with the research satisfying the reasonably appropriate specifically stated degree requirements and equivalent services being required of all degree candidates, meets the primary purpose test and is excludable from gross income. Rev. Rul. 63–250 superseded. §1.117–1. (Sec. 117, ’86 Code.) Rev. Rul. 75–280, 1975–2 C.B. 47.

agency, supported by funds from a foundation to finance an intern training program are not excludable fellowship grants. Such amounts are compensation for services rendered and are includable in the gross income of the recipients. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 66-83, 1966-1 C.B. 30. 452.114 State agency; energy-related studies. Grants awarded by a state agency, responsible for promoting energy-related studies within the state, to state residents for energy-related courses of study that they are required to pursue full-time and who may be called upon to furnish progress reports, but who are not required to remain in the state or work in the energy field after completion of their courses, qualify as scholarships or fellowship grants. §1.117–1. (Sec. 117, ’86 Code.) Rev. Rul. 76-251, 1976-2 C.B. 33. 452.115 State dietetic internship program. Taxpayer received a stipend from a state supported dietetic internship program consisting of short tours of duty at several state institutions and some classroom instruction but not leading to a degree. Food preparation and supply system operations were studied and no services were performed. Held, the stipend was an excludable scholarship or fellowship grant. (Sec. 117, ’86 Code.) Thomas P. Phillips, 57 T.C. 420, Acq., 1972-1 C.B. 2.

452.108 Resident physician; Family Practice Residency Program. Stipends paid by a university to a resident doctor who, while participating in a Federally funded three-year Family Practice Residency Program performs services in the university’s teaching hospital and in a Model Family Practice Unit are not excludable from gross income as a scholarship or a fellowship grant. §§1.61-2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 76-252, 1976-2 C.B. 36.

452.116 State legislative internships. Amounts received by graduate and undergraduate students under internship programs sponsored by a tax-exempt organization are not excludable scholarships or fellowship grants where the students are required as part of the program to work on assignments of the state legislature and to perform routine duties within the offices of state political leaders. Such amounts are compensation for services rendered. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 64-212, 1964-2 C.B. 39.

452.109 Resident physician; medical training program. Amounts received under a grant from a medical training program as a trainee in neurology are not excludable as a fellowship grant where services performed are of material benefit to the hospital and are not separable from those performed as an appointed resident physician. §§1.117-4. (Sec. 117, ’86 Code.) Rev. Rul. 71–346, 1971-2 C.B. 99.

452.117 State legislative internships. Amounts received under a state legislative internship program that primarily provides meaningful services for the legislature are not excludable scholarship or fellowship wants but represent compensation for services rendered. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) Rev. Rul. 71-559, 1971-2 C.B. 102.

452.110 Resident physician; optional research program. Amounts received by a resident physician in internal medicine for participating in an optional research program approved by his hospital are not excludable from gross income as a scholarship or fellowship grant. Rev. Rul. 57-386 amplified. §§1.61-2, 1.117-1. (Secs. 61, 117; ’86 Code.) Rev. Rul. 72-469, 1972-2 C.B. 79.

452.118 State student loan; repaid by employer. The amount received by a private school teacher from his employer to assist him in repaying a loan he received under the State’s student loan program while attending college, is additional compensation includable in the teacher’s gross income; however, the payments of interest made by the teacher on the loan are deductible. §§1.61-2, 1.163-1, 1.262-1. (Secs. 61, 163, 262; ’86 Code.) Rev. Rul. 70-282, 1970-1 C.B. 16.

452.111 Ruling procedure. Instructions are provided with respect to the information to be submitted with requests for rulings or determination letters concerning the tax treatment of amounts received for study or research. §§1.61–2, 1.117–1. (Secs. 61, 117; ’86 Code.) Rev. Proc. 68-11, 1968-1 C.B. 761.

452.119 State student loan; repayment forgiven. Amounts advanced to a medical student under a State’s Medical Education Loan Scholarship Program that are cancelled upon fulfillment of a condition to practice in a rural area of the State are includible in the recipient’s gross income in each taxable year to the extent that repayment of 452.112 Russell Sage Foundation award. a portion of the loan is forgiven. Modified to apply Amounts awarded by the Russell Sage Founda- only to loans made after June 11, 1973. §§1.61–1, tion, under its residency program, to qualified 1.117-4, 301.7805-1. (Secs. 61, 117, 7805; ’86 sociologists, social psychologists, and anthropol- Code.) 452.105 Research stipends; visiting fellows. ogists for the purpose of providing such individuRev. Rul. 73–256, 1973–1 C.B. 56; Rev. Rul. Basic stipends received by visiting fellows during als with specialized training and experience rele- 74-540, 1974-2 C.B. 38. a year’s residency at an educational center that vant to professional practice in health or welfare provides facilities for individual research and at operating agencies or professional schools, are 452.120 Stipend; program for improved study are excludable from gross income as fellow- fellowship-grants excludable from gross income. education in desegregated schools. Amounts received by teachers and supervisors who particiship grants, subject to the limitations of section §1.117-2. (Sec. 117, ’86 Code.) pate in programs of the local board of education to 110. Amounts received that were specifiRev. Rul. 60-72, 1960-1 C.B. 44. improve the education of children in desegregated cally designated to cover traveling expenses from their homes to the center are excludable under sec- 452.113 Social service interns. Stipends paid to schools are not excludable from their gross tion 117(a)(2) to the extent actually expended for interns performing services for a social service income under section 117(a). Such amounts repre-

sent compensation for services rendered or to be rendered and are wages subject to income tax withholding. §1.117-4. (Sec. 117, ’86 Code.) Rev. Rul. 67-239, 1967-2 C.B. 73.

includible in their gross income. §1.117–2. (Secs. 61, 117; ’86 Code.) Rev. Rul. 57-522, 1957-2 C.B. 50.

452.127 Theological student as assistant pastor. Amounts received by students of a theological seminary from a parish congregation during the year they are assigned and are required to spend in church work as part-time or assistant pastors are compensation for services rendered and are not excludable from gross income as scholarship or fellowship grants. Further, the value of board and room, if furnished, and traveling expenses are

452.134 VA stipends. The Service will not follow the Wells and Anderson decisions and will litigate cases in which amounts have been received by graduate students from the Veterans’ Administration under circumstances substantially similar to those in Wells and Anderson. Rev. Rul. 59–118 reinstated; Rev. Rul. 65–59 revoked. §§1.117-4, 301.7805-1. (Secs. 117, 7805; ’86 Code.) Rev. Rul. 82-57, 1982-1 C.B. 24.

452.135 VA stipends; psychology trainees. Amounts paid by the Veterans Administration to graduate students while serving a training period at Veterans hospitals as staff assistants as a condi452.128 Trainees; state vocational project. tion to receiving a doctoral degree in psychology 452.121 Stipend; student-trainees; school of The cost of vocational training and amounts from a university represent compensation, not medical technology. Stipends paid by a school of received by individuals participating in a state scholarship grants. §§1.61–2, 1.117-4. (Secs. 61, medical technology to its student-trainees, who experimental training project at educational insti- 117; ’86 Code.) are required to perform no significant services for tutions to meet the cost of room, board, and perRev. Rul. 59–118, 1959-1 C.B. 41. the school as a condition to receiving such stipend, sonal maintenance are excludable scholarships or are excluded from gross income as scholarships or fellowship grants, subject to the limitations of sec- 452.136 War Orphans’ Educational Assisfellowships. Such amounts are not wages subject tion 110. The value of transportation fur- tance Act. Amounts received by a student under to income tax withholding, however, amounts nished in kind, or cash in lieu thereof, for trips to the provisions of the War Orphans’ Educational paid for work done on weekends outside the train- and from school at the beginning and end of such Assistance Act of 1956 and used for his support ing program are wages subject to withholding. training and for one round trip home for each three- are scholarships or fellowships grants and are not month period enrolled in school is similarly taken into account in determining total support of §1.117-1. (Sec. 117, ’86 Code.) excluded from gross income to the extent the student for dependency exemption purposes. Rev. Rul. 64-29, 1964-1 (Part 1) C.B. 79. expended by the recipient for that purpose. Rev. Rul. 59-355 revoked. §§1.61-1, 1.117-1, 452.122 Student journalism trainees. Sti1.152-1. (Secs. 61, 117, 152; ’86 Code.) §1.117-1. (Sec. 117, ’86 Code.) pends to selected students provided by a university Rev. Rul. 68-415, 1968–2 C.B. 65; Mary KeegRev. Rul. 66-208, 1966-2 C.B. 38. from funds contributed by newspapers under a stra, 48 T.C. 897, Acq., 1968–2 C.B. 2. journalism program in which the students receive 452.129 Travel expenses in fellowship grant. no degree and work with the regular newspaper A fellowship grant based on an application in staff, performing the same duties and subject to the which travel expenses were itemized satisfies the same rules as the regular employees, are not schol- requirements of reg. 1.117-1(b)(2)(i). §1.117–1. arships or fellowships but are compensation for (Sec. 117, ’86 Code.) Rev. Rul. 69–367, 1969-2 C.B. 13. services rendered. §§1.61–2, 1.117-4. (Secs. 61, 117; ’86 Code.) 452.130 Travel expenses while on research Rev. Rul. 64-213, 1964-2 C.B. 40. project. The entire amount of a grant from a tax452.123 Student loan interest subsidy pay- exempt organization received by an individual, ments; Higher Education Act of 1965. Student not a candidate for a degree, to cover expenses for loan interest subsidy payments made by the Com- travel and study in a foreign country is considered missioner of Education to lenders for the interest as received incident to a fellowship grant. The they agree not to collect from borrowers under the amount received is excludable from the gross Higher Education Act of 1965 are scholarships income of the recipient to the extent expended, excludable from the borrowers’ gross income, not subject only to the 36-month limitation period. deductible under section 163, and not reportable (Sec. 117, ’86 Code.) Rev. Rul. 59–81, 1959–1 C.B. 37. on Form 1099, U.S. Information Return. §§1.61-1, 1.117-3, 1.163-1. (Secs. 61, 117, 163; 452.131 Tuition and work payments; college ’86 Code.) work-and-learn program. Tuition and work payRev. Rul. 75-537, 1975-2 C.B. 32. ments granted to students enrolled in a course of 452.124 Student nurses. The value of room and study at a college having no tuition charge and board furnished by accredited schools of nursing requiring all students to participate in a work proto full-time student nurses, a part of whose training gram which implements its educational philosoconsists of performing services in the hospital, phy are scholarships, but payments to students constitute scholarships. The value of such contrib- working for the college during the summer uted services and accommodations should be dis- months, who are not enrolled during this period, regarded in determining whether the student are includible in gross income. Rev. Rul. 55–500 nurses received more than one-half of their sup- distinguished. §§1.61-1, 1.117-1. (Secs. 61, 117; port from the parent for the purpose of determin- ’86 Code.) Rev. Ru1. 64-54, 1964-1 (Part 1) C.B. 81. ing a personal exemption allowance. §§1.117–1, 1.151-2, 1.152-1. (Secs. 117, 151, 152; ’86 452.132 Two-year doctoral program. A twoCode.) year program required a university doctoral candiRev. Rul. 58–338, 1958-2 C.B. 54. date to teach during the first year at an associated 452.125 Summer school grant. Grants paid to college to qualify for a stipend for the second year. a university’s faculty members by a fund operated The stipend received in the first year, paid by the to benefit its educational program to enable the associated college, is includable in his income; the recipients to engage in study or research at another stipend received for the second year when he university during the summer months may be worked full-time on his dissertation, paid by his excludable from gross income, depending upon home university, is excludable as a scholarship. the conditions on which the grants are made. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 73–368, 1973-2 C.B. 27. §1.117-1. (Sec. 117, ’86 Code.) Rev. Rul. 62-188, 1962-2 C.B. 42. 452.133 U.S. Air Force; candidate for degree; 452.126 Teaching interns; payments by Air Force Institute of Technology. The regular board of education. Amounts received by teach- salary paid to a member of the U.S. Air Force ing interns who perform services as temporary while attending the Air Force Institute of Technolteachers for a local board of education are not ogy, as a candidate for the degree of Master of excludable scholarships, but represent compensa- Business Administration in Hospital Care Admintion for services rendered and are wages subject to istration is not excludable from gross income as a scholarship or fellowship grant. §§1.61–2, income tax withholding. §§1.117-4. (Secs. 117, 1.117-4. (Secs. 61, 117; ’86 Code.) 3402; ’86 Code.) Rev. Rul. 70-137, 1970-1 C.B. 25. Rev. Rul. 67-443, 1967–2 C.B. 75.