Question

See the multiple choice question below, which deals with how to treat a grant from an employer that pays for tuition. I do not ask you to answer the MC question. The correct answer is C. Required: Rank the four answer from most attractive to the taxpayer to least attractive to the Taxiver, ignoring the fact that the correct answer is C. No partial credit. Half credit for no explanation or inadequate explanation. Copy and paste entire letter answer from Explanation MC below Most attractive 2nd most Least attractive Additional comments (you can earn maximum points if comment is insightful above and beyond the requirements): 13 Bill Walden received a $2,100 grant from his employer and, as required by his employer, used all of the money for tuition and fees to take three graduate-school courses during the period September 1 to December 31 of the current year. Walden is not a candidate for a degree and has never received a scholarship or fellowship grant before. He had previously met the minimum educational requirements for his employment position; however, due to new requirements established by his employer, these courses were necessary for him to retain his job. In computing his current-year taxable income, Walden should include A. Gross income of $2,100 and an education expense deduction of $2,100. B. Gross income of $2,100 and no education expense deduction. C. No gross income and no education expense deduction. D. Gross income of $0 and an education expense of $2,100. The correct answer is C. A. The grant is excludable and nondeductible. B. The education grant is excludable.

Answer 1

Solutions :

Most Attractive	No Gross income and no education expense deduction	As the grant is received for the purpose of employment and the situation would have not arised had it not been for the purpose if the job other then that, education expense deduction are available for attending college or another post secondary school
2nd most	Gross income of $2100 and education expenses of $2100	As the grant is received instead of treating it as no income and no education expenses , it can always be claimed and deducted as it has the same net effect
2nd least	gross income $0 and education expenses deductions	As the grant is received for the purpose of employment and used for the same purpose it is just a reimbursement hence it can be excluded from the income and meanwhile as the grant is used for the tuition fees it can be deducted
least	gross income$2100 and no education expenses deduction	The Grant should not be included in the income has it is clearly not the income and used for any personal purpose