This is a Taxation and accounting problem. I have also given the solution calculation. There is one thing I am confused about,

Now the question is, which amounts are taxable and which should be included on his return. Must be in proper letter form.

Can you please help me in solving it correctly?

Scenario:

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 part-time instructors. Hank paid $500 for books and supplies and incurred living expenses of $7,400.

My Analysis and calculation:

Through, Sec 117 (b)(1) also states that in order to be considered for qualified scholarship The individual must establish that any amounts used were for qualified tuition and related expenses.

According to, Sec 117 (d)(1) allows from the exclusion of gross income any qualified tuition reduction provided to an employee of an organization for the education of the employee

So, using the above sections, we can calculate the gross income that Hank must report

Gross Income = $1,000+$7,000 -$500 = $7,500

Hanks Gross Income = $7,500

Hanks tuition fee of the university is $8,000. This amount is excluded from the gross income and also he paid for the books and supplies are $500.