Question

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for:

A. Tuition only.
B. Tuition, books, and supplies.
C. Tuition, books, supplies, meals, and lodging.
D. Meals and lodging.
E. None of these.

Answer 1

The correct answer is option B. A scholarship recipient may exclude from gross income the scholarship proceeds used for tuition, books, and supplies. These are qualified education expenses, while meals and lodging are not included in this category.

Step-by-step explanation:

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for certain qualified education expenses.

According to the IRS guidelines, these qualified expenses generally include tuition, books, and supplies required for the enrollment or attendance at an eligible educational institution.

Consequently, the correct option that a scholarship recipient may exclude from gross income for the scholarship proceeds used to pay for is B. Tuition, books, and supplies. It's important to note that expenses for meals and lodging are not considered qualified education expenses for purposes of scholarship tax exclusion.