Rev. Rul. 56-101

Under the provisions of the United States Information and Educational Exchange Act of 1948, 22 U.S.C. 1446, otherwise known as the Exchange Visitors Program, Filipino nationals entered the United States for the purpose of undergoing advanced training and post-graduate studies at approved hospitals and other institutions in the United States. They served as trainees, interns, and resident doctors with a training hospital. Each individual entered into a separate contract with the hospital. They received stipends which they claim were solely for the purpose of enabling them to undergo training so as to be of greater service to their people and not for professional employment. Held, where the trainee performs services which are of material benefit to the trainer and receives substantially the same amount as is paid to a citizen performing similar services, the payments made constitute compensation for personal services performed. Such payments are not excludable as fellowship grants under section 117 of the Internal Revenue Code of 1954. See Rev. Rul. 55-554, C.B. 1955-2, 36.