ROTC scholarships whether they are used for tuition, fees, books OR room and board are not taxable. These "scholarships" are not scholarships under 26 USC 117. 26 CFR 1.117-4(b) specifically removes them from Section 117. They are exempt from gross income under 26 USC 134 as qualified military allowances. Publication 970 deals with Section 117 exempt scholarships, and not Section 134. A better publication for reference is the Armed Forces Tax Guide, Publication3.
