Bryce pays $40,000 for his adult grandson's tuition at medical school and $18,000 for the grandson's room and board in the medical school's dormitory. All payments are made directly to the medical school. Do these payments by Bryce qualify as gifts?
What will be an ideal response?
Section 2503(e) exempts the payment of tuition from being treated as a gift. The room and board payments are a gift to the grandson but after the annual exclusion, he has a taxable gift of $3,000.
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