The IRS has released a number of rulings on whether or not scholarship awards made through a private foundation's scholarship program are taxable expenditures. In PLR 201014069, recipients of the scholarship had to establish a substantial connection to a specific community, be from a low-income family, and demonstrate "strength of character and initiative in overcoming obstacles and hardships." In PLR 201014070, a screening committee reviewed selection criteria, which included an essay, high school honors and activities, notice of acceptance from chosen college, letters of recommendation, official transcript of high school record, and a letter regarding financial aid, and the committee made it's decision based on acedemic standards before reviewing financial need. In PLR 201014071, the private foundation's scholarship program was created to help economically disadvantaged children attend early childhood educational instritutions. Finally, in PLR 201014072, the private foundation awarded scholarships to children and grandchildren of a specific company, and an eligible recipient had to carry a minimum grade point average. The IRS ruled that each of the scholarship programs in these rulings qualified as tax-exempt expenditures that were not included in the gross income of the recipients.
Posted by Jenny Robertson, Associate Editor, Wealth Strategies Journal.
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