I'm wondering if you receive Ch 33 book stipend, can you still claim the deduction of books as expenses on the American Opportunity Tax Credit? The stipend similar to that of the BAH can be used to pay for anything. You can purchase a dog with it if you'd like. It does say it is for Book and supplies, but it is not "restricted" to purchasing books or supplies with it.
The BAH clearly says on the IRS's form 970 that it is not "restricted" therefore you don't have to reduce tuition or expenses toward the AOTC with the BAH received. The money received for the book stipend is just extra money paid, whether you need to purchase books or not, you receive the money. Can you please support your answer with data. I've even read Tax Court cases as part of my search. The book stipend was intended to be used for educational supplies and books, but was not required (in that you could buy a dog with it). This is the part I can't figure out. Hoping someone can show me the law.
Per IRS:
To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. You don't subtract any amount of the BHA because it was paid to you and its use wasn't restricted.
