Scholarship Awards Will Not Be Taxable

Contact person - ID number: * * *

You asked for advance approval of your scholarship grant procedures under Internal Revenue Code section 4945(g). This approval is required because you are a private foundation that is exempt from federal income tax. You requested approval of your scholarship program to fund the education of certain qualifying students.

Also, awards made under these procedures are scholarship or fellowship grants and are not taxable to the recipients if they use them for qualified tuition and related expenses (subject to the limitations provide in Code section 117(b)).

More than 300 B students graduate each year. The number of scholarships that you award will vary depending on the amount of funds available to be distributed. Based on the market value of your funds, you expect to award less than five scholarships annually. The amount of each scholarship is generally $x or less. Each year, you will advise your scholarship committee of the amount of funds available. Then the committee will publicize the availability of scholarships at the school.

Your trustee has no discretion regarding the selection of scholarship recipients. The scholarship committee consists of the manager of the nearest trustee bank branch, the president of the school board and an area citizen selected by the other two members.

The committee reviews the academic achievement and financial need of each applicant. After the selections have been made, the trustee is provided the names of the students selected and the amount awarded.

All scholarships are awarded on an objective and non-discriminatory basis. No scholarship may be awarded to any disqualified person as defined in Code Section 4946.

The trustee pays the funds directly to the university or college the student will attend. The university or college is also advised that acceptance of the funds signifies its agreement to:

You will maintain all records relating to individual grants, including information obtained to:

• The foundation awards the grant on an objective and nondiscriminatory basis.

• The IRS approves in advance the procedure for awarding the grant.

• The grant is a scholarship or fellowship subject to the provisions of Code section 117(a).

• The grant is to be used for study at an educational organization described in Code section 170(b)(1)(A)(ii).

• This determination only covers the grant program described above. This approval will apply to succeeding grant programs only if their standards and procedures don't differ significantly from those described in your original request.

• This determination applies only to you. It may not be cited as a precedent.

• You cannot rely on the conclusions in this letter if the facts you provided have changed substantially. You must report any significant changes to your program to the Cincinnati Office of Exempt Organizations at:

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  Internal Revenue Service

   

  Exempt Organizations Determinations

   

  * * *

   

• You cannot award grants to your creators, officers, directors, trustees, foundation managers, or members of selection committees or their relatives.

• All funds distributed to individuals must be made on a charitable basis and further the purposes of your organization. You cannot award grants for a purpose that is inconsistent with Code section 170(c)(2)(B).

• You should keep adequate records and case histories so that you can substantiate your grant distributions with the IRS if necessary.

If you have questions, please contact the person listed at the top of this letter.