Barney is a full-time graduate student at State University. He serves as a teaching assistant for which he is paid $700 per month for 9 months and his $5,000 tuition is waived. The university waives tuition for all of its employees. In addition, he receives a $1,500 research grant to pursue his own research and studies. Barney's gross income from the above is:
a. $0.
b. $6,300.
c. $11,300.
d. $12,800.
e. None of these.
b
RATIONALE: The monthly stipend of $700 (for 9 months = $6,300) for teaching is taxable compensation. The research grant of $1,500 is to assist him in his education and is not in exchange for services; therefore, the grant is a nontaxable scholarship. The tuition waiver is excluded as a qualified tuition reduction program.
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