crr4000,
Don't confuse scholarship with free gift. Scholarships can be in the form of grants or stipends and can be taxable even in the pure form you are thinking. They just are monies allocated to facilitate learning and training. As a US citizen, she is required to report all world-wide income including the payments she received in France. I have no idea where that 100.000 came from, but I personally would ignore it unless you can track down a US-France treaty provision to that effect. If the teaching assignment was billed as a training opportunity, I would definitely want to report the payments as a stipend. If it was a regular job, it was earned income and you should report it via the Miscellaneous Income instructions in the link. I haven't checked if that would then generate additional tax for not having social security and medicare withheld.
