The following payments or allowances shall not be considered to be amounts received as a scholarship or a fellowship grant for the purpose of section 117:
(a) Educational and training allowances to veterans. Educational and training allowances to a veteran pursuant to section 400 of the Servicemen's Readjustment Act of 1944 (58 Stat. 287) or pursuant to 38 U.S.C. 1631 (formerly section 231 of the Veterans' Readjustment Assistance Act of 1952).
(b) Allowances to members of the Armed Forces of the United States. Tuition and subsistence allowances to members of the Armed Forces of the United States who are students at an educational institution operated by the United States or approved by the United States for their education and training, such as the United States Naval Academy and the United States Military Academy.
(c) Amounts paid as compensation for services or primarily for the benefit of the grantor. (1) Except as provided in paragraph (a) of §§ 1.117-2 and 1.117-5, any amount paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research, if such amount represents either compensation for past, present, or future employment services or represents payment for services which are subject to the direction or supervision of the grantor.
(2) Any amount paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research primarily for the benefit of the grantor.
However, amounts paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research are considered to be amounts received as a scholarship or fellowship grant for the purpose of section 117 if the primary purpose of the studies or research is to further the education and training of the recipient in his individual capacity and the amount provided by the grantor for such purpose does not represent compensation or payment for the services described in subparagraph (1) of this paragraph. Neither the fact that the recipient is required to furnish reports of his progress to the grantor, nor the fact that the results of his studies or research may be of some incidental benefits to the grantor shall, of itself, be considered to destroy the essential character of such amount as a scholarship or fellowship grant.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960, as amended by T.D. 8032, 50 FR 27232, July 2, 1985]
Notes of Decisions
Cited in
164
cases, 1963–2014 · leading case:
Adams v. Comm'r, 71 T.C. 477 (Tax Ct. 1978).
Adams v. Comm'r, 71 T.C. 477 (Tax Ct. 1978).
· cites it 6× “" Amounts paid to an individual to enable him to pursue studies are considered amounts received as a fellowship grant "if the primary purpose of the studies or *484 research is to further the education and training of the recipient in his individual *17 capacity" and if the…”
Rosenthal v. Comm'r, 63 T.C. 454 (Tax Ct. 1975).
· cites it 8× “" That paragraph further provides that services required of all candidates as a condition for receiving a particular degree shall not be regarded as part-time employment.”
Haley v. Comm'r, 54 T.C. 642 (Tax Ct. 1970).
· cites it 10× “Held , amounts received by the petitioner from the Oregon State Welfare Commission while on educational leave are not excludable from petitioner's gross income as either scholarships or fellowship grants.”
Jamieson v. Comm'r, 51 T.C. 635 (Tax Ct. 1969).
· cites it 8× “, 3 which, it is contended, places an unwarranted restriction on such meaning.”
Reese v. Comm'r, 45 T.C. 407 (Tax Ct. 1966).
· cites it 4× “We will deal with petitioner's alternative theory first.”
Willie v. Comm'r, 57 T.C. 383 (Tax Ct. 1971).
· cites it 10× “Petitioner received $ 420 for his attendance on a per diem basis during 1967 from funds provided under that Act, which amount he did not include in his taxable income for that year. Held , the payments received by petitioner are taxable as compensation and are not excludable as…”
Olick v. Comm'r, 73 T.C. 479 (Tax Ct. 1979).
· cites it 6× “Conversely, the regulations provide that payments made as compensation for present or future employment services are not excludable as a scholarship. Sec. 1.117-4(c)(1), Income Tax Regs.”
Bailey v. Comm'r, 60 T.C. 447 (Tax Ct. 1973).
· cites it 6× “117-4 of such regulations states: The following payments or allowances shall not be considered to be amounts received as a scholarship or a fellowship grant for the purpose of section 117 : * * * * (c) Amounts paid as compensation for services or primarily for the benefit of the…”
Spiegelman v. Comm'r, 102 T.C. 394 (Tax Ct. 1994).
· cites it 6× “, amplified: amounts paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research are considered to be amounts received as a * * * fellowship grant * * * if the primary purpose of the studies or research is to further the education and training…”
Meehan v. Comm'r, 66 T.C. 794 (Tax Ct. 1976).
· cites it 4× “The following payments or allowances shall not be considered to be amounts received as a scholarship or a fellowship grant for the purpose of section 117 : * * * (c) Amounts paid as compensation for services or primarily for the benefit of the grantor .”
Yarlott v. Comm'r, 78 T.C. 585 (Tax Ct. 1982).
· cites it 4× “Thus, if an amount paid "represents either compensation for past, present, or future employment services," then such amount is not to be considered as an amount received as a scholarship or a fellowship grant for purposes of section 117 .”
Moll v. Comm'r, 57 T.C. 579 (Tax Ct. 1972).
· cites it 6× “OPINION This is another of the many recent cases in which intern or resident physicians have attempted to exclude part of their income as a fellowship or scholarship grant under section 117, I.”
— 26 C.F.R. § 1.117-4(c) — 1 case
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