Which of the following can be excluded from income as a qualified scholarship?

A scholarship for tuition and fees can be excluded from income because it is specifically designed to support educational expenses. Under U.S. tax law, qualified scholarships are awards made for the purpose of paying for qualified education expenses, which typically include tuition and fees required for enrollment or attendance at an eligible educational institution.

This allows students to receive funds to cover their educational costs without having to count that amount as taxable income, as long as the funds are used for qualified expenses. This provision encourages higher education participation by alleviating some of the financial burden on students and their families.

In contrast, gifts for any educational purpose, funds used for personal expenses, and prizes awarded in a lottery do not fall under the qualified scholarships definition and therefore cannot be excluded from taxable income. Gifts, while they may support education, do not directly correspond to the specific expenses covered under scholarship guidelines. Personal expenses are not considered qualified educational costs, and lottery prizes are generally taxable as income, without any specific exclusion for educational use.