Tax Research Problem Requirements:

1) letter to Hank explaining which amounts are taxable and which should be included on his return. Must be in proper letter form.

2) memo to the tax file supporting your conclusions about the taxability of the amounts.

Information:

Hank is a graduate accounting student at Saluki State University. Saluki State awarded Hank a $1,000 scholarship. Hank also works as a half-time teaching assistant in the School of Accountancy at Saluki State. He is paid $7,000 per year and his tuition was waived ($8,000). The salary is equal to that paid to other prat-time instructors. Hank paid $500 for books and supplies and incurred living expenses of $7,400.