An accountant who I spoke with says it is "unearned", which sets off an ATM tax.
Is TT in error here?
It is unearned income. But, if you can be claimed as a dependent on someone else's return, taxable scholarship is treated a earned income for purposes of calculating your standard deduction. It is still not earned income for purposes of the earned income credit (which dependents can't get anyway) or qualifying for an IRA deduction.
if entered properly, TurboTax (TT) puts it on line 1 of form 1040, with the notation SCH