Opinion ID: 382115
Heading Depth: 1
Heading Rank: 2

Heading: R.C. section 117 provides, in pertinent part:

Text: (a) General rule. In the case of an individual, gross income does not include (1) any amount received (A)as a scholarship at an educational organization described in section 170(b) (1)(A)(ii), or (B)as a fellowship grant, including the value of contributed services and accommodations; .... . (b) Limitations. (2) Individuals who are not candidates for degrees. In the case of an individual who is not a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii), subsection (a) shall apply only if the condition in subparagraph (A) is satisfied and then only within the limitations provided in subparagraph (B). (A)Conditions for exclusion. The grantor of the scholarship or fellowship grant is (i)an organization described in section 501(c)(3) which is exempt from tax under section 501(a). (B)Extent of exclusion. The amount of the scholarship or fellowship grant excluded under subsection (a)(1) in any taxable year shall be limited to an amount equal to $300 times the number of months for which the recipient received amounts under the scholarship or fellowship grant during such taxable year .... 2 Treasury Regulation § 1.117-3 provides, in pertinent part: (a) Scholarship. A scholarship generally means an amount paid or allowed to, or for the benefit of, a student, whether an undergraduate or a graduate, to aid such individual in pursuing his studies. The term includes the value of contributed services and accommodations (see paragraph (d) of this section) and the amount of tuition, matriculation, and other fees which are furnished or remitted to a student to aid him in pursuing his studies. The term also includes any amount received in the nature of a family allowance as a part of a scholarship. However, the term does not include any amount provided by an individual to aid a relative, friend, or other individual in pursuing his studies where the grantor is motivated by family or philanthropic considerations. If an educational institution maintains or participates in a plan whereby the tuition of a child of a faculty member of such institution is remitted by any other participating educational institution attended by such child, the amount of the tuition so remitted shall be considered to be an amount received as a scholarship. (c) Fellowship grant. A fellowship grant generally means an amount paid or allowed to, or for the benefit of, an individual to aid him in the pursuit of study or research. The term includes the value of contributed services and accommodations (see paragraph (d) of this section) and the amount of tuition, matriculation, and other fees which are furnished or remitted to an individual to aid him in the pursuit of study or research. The term also includes any amount received in the nature of a family allowance as a part of a fellowship grant. However, the term does not include any amount provided by an individual to aid a relative, friend, or other individual in the pursuit of study or research where the grantor is motivated by family or philanthropic considerations. 3 Treasury Regulation § 1.117-4 specifically lists items not considered as scholarships or fellowship grants: The following payments or allowances shall not be considered to be amounts received as a scholarship or a fellowship grant for the purpose of section 117: (c) Amounts paid as compensation for services or primarily for the benefit of the grantor. (1) Except as provided in paragraph (a) of § 1.117-2, 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. (2) Any amount paid or allowed to, or on behalf of, an individual to enable him to pursue studies or research primarily for the benefit of the grantor. 4 Testimony at trial disclosed that a physician with comparable education and experience, who elected to enter a general medical practice rather than train for a specialty, could have earned from $40,000 to $50,000 annually at the time of plaintiff's internship and residency