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If a Tuition Reduction Is Taxable, What’s the Measure of Income?  


Author:  Erik M. Jensen.


Source: Volume 35, Number 04, Summer 2018 , pp.63-70(8)




Journal of Taxation of Investments

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Abstract: 

For many families and individuals, the price of a college education is the largest investment they will make. This article considers what the measure of income should be if a tuition reduction is taxable, and it challenges the idea that an educational institution’s stated tuition figure should control in that determination. It’s the value of the reduction, not the dollar difference between sticker price and the tuition actually paid by a particular student, that is potentially income, and the article suggests one reasonable method that might be used to determine that value. Although the focus of the article is on tuition reductions, the argument applies just as well to other situations in which a price reduction (or what in form looks like a price reduction) is taxable.

Keywords: qualified tuition reduction, scholarship, IRC Sec. 117(d), valuation

Affiliations:  1: Case Western Reserve University.

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