Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from StateUniversity. The scholarship provided the following:Tuition and fees$15,000Housing and meals$6,000Books and supplies$1,500Transportation$1,200a. Determine the effect of the scholarship on Sally's gross income.Included in/Excluded fromIncomeTuition and feesHousing and mealsBooks and suppliesTransportationb. Sally's brother, Willy, was not a gifted athlete, but he received $8,000 from their father's employer as a scholarship during the year. Theemployer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies. Willy alsoreceived a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field ofstudy. Indicate whether the following statements are "True" or "False" regarding the effect of the scholarships on Willy's and his father'sgross income.The $8,000 scholarship is additional compensation toWilly's father and is included in his gross income.• The scholarship is simply a payment to assist children ofemployees seeking an education and so is excluded fromWilly's father's gross income.• The $6,000 scholarship is taxable to Willy since hereceived it as a result of a contest.

a)The effect of the scholarship on Sally's gross income is given as,

Answered: $6,000 $1,500 $1,200

Business

Accounting

$6,000 $1,500 $1,200

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 33P

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Question

Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from State
University. The scholarship provided the following:
Tuition and fees
$15,000
Housing and meals
$6,000
Books and supplies
$1,500
Transportation
$1,200
a. Determine the effect of the scholarship on Sally's gross income.
Included in/Excluded from
Income
Tuition and fees
Housing and meals
Books and supplies
Transportation
b. Sally's brother, Willy, was not a gifted athlete, but he received $8,000 from their father's employer as a scholarship during the year. The
employer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies. Willy also
received a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field of
study. Indicate whether the following statements are "True" or "False" regarding the effect of the scholarships on Willy's and his father's
gross income.
The $8,000 scholarship is additional compensation to
Willy's father and is included in his gross income.
• The scholarship is simply a payment to assist children of
employees seeking an education and so is excluded from
Willy's father's gross income.
• The $6,000 scholarship is taxable to Willy since he
received it as a result of a contest.

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