Problem $5-34($LO$.2)$

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$

Question Content Area

a$.$Determine the effect of the scholarship on Sally's gross income.

$$Included in$/$Excluded from

IncomeTuition and fees

Included inExcluded from

Housing and meals

Included inExcluded from

Books and supplies

Included inExcluded from

Transportation

Included inExcluded from

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b$.$Sally$\text{'}$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.

TrueFalse

$$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.

TrueFalse

$$The $$6,000$ scholarship is taxable to Willy since he received it as a result of a contest.

TrueFalse