Scholarship and Fellowship Grants as Income: A Search for Treasury Policy

More than five years have elapsed since the enactment of section 117 as a part of the Internal Revenue Code of 1954. In that period there have been several revenue rulings and one judicial decision3 dealing with problems arising under section 117. A reading of these suggests that the difficulties which characterized the income tax treatment of grants and awards in aid of student and scholar prior to the enactment of the section still remain. It is the thesis of what follows that this need not be so, that a broader reading of section 117 is justified and appropriate, and that a clarification of Treasury policy can eliminate further uncertainty in this sector of the income tax law.