I am guessing the answer to the following is 'yes, it is taxable' but I'm struggling to confirm. A student at a U.S. college has received a prestigious award of $10,000 to conduct a charitable project (of their own design) in a country overseas during the summer between their junior and senior years. The entire amount is to be spent on logistics to carry out the award: travel to the country, living expenses while there, purchases necessary to carry out the project (including materials for donation, local marketing, paying collaborators, doing outreach), etc.
Is this award taxable?
It would appear to be taxable because it does not cover qualified education expenses (or education expenses of any kind).
However, is it possible that this award would count as a grant to an individual? And if so - so long as it was awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the IRS, might it actually NOT be taxable? In particular, I am exploring this co-requirement:
The grant's purpose is to achieve a specific objective, produce a report or similar product, or improve or enhance a literary, artistic, musical, scientific, teaching, or similar capacity, skill or talent of the grantee.
Would the award described above qualify as a grant "to achieve a specific objective," or am I mis-reading this part of the tax code? I drew it from here: https://www.irs.gov/charities-non-profits/private-foundations/grants-to-individuals
To complicate matters, in some cases the student having received this award is an U.S. citizen, and some years, the student receiving it is a citizen of another country, studying in the U.S. on a visa.
Any input is welcome - thank you!
