smith@umn-cs.UUCP (06/06/83)
#N:umn-cs:10500006:000:1195 umn-cs!smith Mar 5 13:03:00 1983 The IRS people here have come up with a novel interpretation of the rules concerning "exempt" assistantships and "requirements for a degree". According to the law, an assistantship is tax exempt only if the work involved is part of the requirements for the degree being pursued. So, the local folks have started to interpret this literally: they will only recognize the exemption if the department's requirements LITERALLY specify the amount of work that is done. For example, I heard of a fellow in the Chemistry department here at U Minnesota that got into trouble: he had treated two years' worth of assistantship income as exempt. The department rules say that a Ph.D. candidate must do AT LEAST 3 months' research: the IRS ruled that 3 MONTHS worth of the income was therefore exempt, the rest was taxable (plus interest). Most others are in worse shape: their departments consider it foolish to place any time requirement on research, so a specific time period isn't specified at all. QUESTION: Has this sort of insanity cropped up anywhere else? Evidently IRS offices have a good deal of freedom in interpreting such things, so it's hard to tell how to fight it. Rick.