Determine the effect on Adrian s gross income for 2018 and 2019.

Adrian was awarded an academic scholarship to State University for the 2018-2019 academic year. He received $6,500 in August and $7,200 in December 2018. Adrian had enough personal savings to pay all expenses as they came due. Adrian’s expenditures for the relevant period were as follows:

Tuition, August 2018 ........................$3,700
Tuition, January 2019 .........................3,750
Room and board
August-December 2018 ....................2,800
January-May 2019 ..............................2,500
Books and educational supplies
August-December 2018 ....................1,000
January-May 2019 ..............................1,200

Solutions

Expert Solution

Adrian received a total of $13,700 and spent $9,650 ($3,700 + $3,750 + $1,000 + $1,200) on tuition, books, and supplies. The amount received for room and board is not excludible from gross income. Therefore, he must include $4,050 ($13,700 − $9,650) in gross income. When he received the money in 2018, Adrian’s total expenses for the period covered by the scholarship were not known. Therefore, he is allowed to defer reporting the income until 2019, when all the uncertainty is resolved.

Adrian can defer reporting the income until 2019 when all the uncertainty is resolved.

Renze Joy Candido answered 1 year ago

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