- 5 - 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 certainPage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011