imaattion,
You remind me that there is one additional twist in that so long as the scholarship is not specifically designated for tuition and other qualified expenses, one can choose to treat the scholarship as taxable income and include it in the standard deduction equation. It does receive unearned income treatment insofar as the 8615 kiddie tax goes. The taxpayer will want to work the NEC income multiple ways to see what costs the least. My guess is leaving the scholarship alone and paying the kiddie tax will be best since the first $2,300 of the NEC income is excluded from the Kiddie Tax so even at a full 24% ordinary income parent tax rate that works out to about ~$170 while 15.3% of $3,000 is ~$460.
