Roland E. Lewis, Jr. - Page 6

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          following type of payment is not excludable from income under               
          section 117:                                                                
               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.                                            
          Sec. 1.117-4(c)(1), Income Tax Regs.  The Supreme Court has held            
          that:                                                                       
               The thrust of the provision [in the section 117 regulations]           
               dealing with compensation is that bargained-for payments,              
               given only as a “quo” in return for the quid of services               
               rendered--whether past, present, or future--should not be              
               excludable from income as “scholarship” funds.                         
          Bingler v. Johnson, 394 U.S. 741, 757-758 (1969).  Based on                 
          petitioner’s testimony, we conclude that any payments by NSBE for           
          petitioner’s education were not in the form of a “qualified                 
          scholarship” within the meaning of section 117.  Any such                   
          payments were made in accordance with the terms of the employment           
          relationship.  If they were in fact made, they were a form of               
          compensation and not the result of disinterested generosity.                
          Thus, the section 117(a) exclusion does not apply in this case.             
               Second, section 127(a)(1) excludes from gross income                   
          “amounts paid or expenses incurred by the employer for                      
          educational assistance to the employee”, but only if the                    
          assistance is furnished pursuant to a qualifying “educational               
          assistance program”.  An “educational assistance program” is a              
          “separate written plan of an employer” which meets certain                  





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