Twice in recent years the United States Tax Court has ruled that a candidate for a higher degree receiving compensation for work performed under a federal research grant could consider his stipend as being exempt from federal income taxation. In each case, the Court held that research of the type carried out by the graduate student was required by the university of all candidates for that degree. Although the federal withholding tax on wages is generally applied to stipends received in such circumstances, it is understood that the graduate student thus affected can assert on his income tax return that his stipend is exempt from taxation under IRC Section 117, or he may file a formal claim with his District Director of Internal Revenue for the refund of overpayment of his federal income tax.

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