Graham has accepted an offer to do graduate work in the chemistry department at StateUniversity. The chemistry department offered Graham a $5,000 tuition reduction and$3,500 toward the cost of room and meals. Under the terms of the scholarship Grahammust work in the chemistry labs during the summer as a research assistant. What amountmust Graham include in his gross income?

A) $5,000

B) $2,500

C) $3,500

D) $8,500

E) Zero - none of the above benefits is included in gross income.

Question

Business

Zoey Avery

21 June, 21:40

Graham has accepted an offer to do graduate work in the chemistry department at StateUniversity. The chemistry department offered Graham a $5,000 tuition reduction and$3,500 toward the cost of room and meals. Under the terms of the scholarship Grahammust work in the chemistry labs during the summer as a research assistant. What amountmust Graham include in his gross income?

A) $5,000

B) $2,500

C) $3,500

D) $8,500

E) Zero - none of the above benefits is included in gross income.

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Answers (1)

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Cynthia · Answer 1

The answer is: C) $3,500

Explanation:

According to the general rule section 117 (d) (1), tuition reductions are not included in the gross income. So the $5,000 tuition reduction will not be included in Graham's gross income.

Graham only has to record as income the $3,500 he will get to cover the costs of room and meals.