ERIC Number: ED285461
Record Type: Non-Journal
Publication Date: 1987-Jun
Scholarships and Fellowships. The Tax Reform Act of 1986. Special Report No. 23.
McMullan, Sandra H.
An overview of the former taxation of scholarships and fellowships is presented, along with information on the practical implications of the changes brought about by the Tax Reform Act of 1986. Included is a copy of the guidelines issued by the Treasury Department and supplementary legislative history information from the "General Explanation of the Tax Reform Act of 1986," which was prepared by the staff of the Joint Committee on Taxation. The Tax Reform Act of 1986 substantially revised Section 117 of the Internal Revenue Code, which defines when funds received in the form of a scholarship or fellowship award are excludable from income. The changes include: (1) only degree candidates may exclude any portion of a scholarship or fellowship from income; (2) degree candidates may only exclude the amount of scholarship and fellowship awards up to the aggregate of tuition and required fees, books, and equipment; and (3) the portion of any scholarship or fellowship that is attributable to services performed by the student (including teaching or research) is subject to taxation as compensation, even if such services were requirements for the degree. Where appropriate, reference is made to the extensive legal guidelines that existed under prior law. (SW)
Publication Type: Legal/Legislative/Regulatory Materials; Reports - Descriptive
Education Level: N/A
Authoring Institution: National Association of Student Financial Aid Administrators, Washington, DC.
Identifiers - Laws, Policies, & Programs: Tax Reform Act 1986