Tuition prepayment by donor not subject to gift or GST tax.
As pointed oat in the letter ruling, this is in contrast to the situation presented in Regs. Sec. 25.2503-6(c), Example (2), in which funds were transferred to a trust that required the trustee to use the trust funds to pay tuition expenses for the transferors grandchildren. In Example (2), because the funds transferred to the trust were not made to an educational organization in payment of specific tuition costs for a designated individual, they did net qualify under this exception. It seems that as long us the prepayment is made directly to the school for tuition costs of specific individuals, it will not be treated us a completed girl for gift tax or GST tax purposes.
Eileen Sherr, CPA, MT, AICPA Technical Manager--Taxation, Washington, DC and Steven A. Thorne, Deloitte Tax LLP, Chicago, IL
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|Title Annotation:||generation-skipping transfers|
|Author:||Thorne, Steven A.|
|Publication:||The Tax Adviser|
|Date:||Jun 1, 2006|
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