Sec. 516. Coordination of American Opportunity Credit and Lifetime Learning Credit with Pell Grants not used for qualified tuition and related expenses
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Section 25A(g)(2) of the Internal Revenue Code of 1986 is amended to read as follows: The amount of qualified tuition and related expenses otherwise taken into account under subsection
(a)with respect to an individual for an academic period shall be reduced (before the application of subsections (b), (c), and (d)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as— a qualified scholarship which is excludable from gross income under section 117, an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, and a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such individual's educational expenses, or attributable to such individual's enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States. For purposes of subparagraph (A), the amount of any Federal Pell Grant under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a ) shall be reduced (but not below zero) by the amount of expenses (other than qualified tuition and related expenses) which are taken into account in determining the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of this subparagraph) of such individual at an eligible educational institution for the academic period for which the credit under this section is being determined. . The amendment made by this section shall apply to taxable years beginning after December 31, 2015.