Tax Planning To Maximize The Benefits Of Faculty Research Grants

Abstract

This article discusses the tax planning possibilities for maximizing the after-tax benefits of research grants received by academic researchers.  The maximum benefit is achieved if the grant qualifies as a “fellowship” as defined in Internal Revenue Code Section 117.  The requirements to meet this status can be precarious, and both the grantor and the grantee must carefully structure the conditions of the grant to qualify for beneficial treatment.  These conditions are analyzed in the paper.