Gift Tax Return question

[Catherine]

Gift tax return needed for a client who gave his son $$ towards a house down payment.  He also paid off the son's student loans - directly TO the lenders, not the son.  One loan was in his (dad's name); the other one was in son's name.  Do those amounts count towards gift?  I know that education costs paid directly to a school do NOT count towards the annual gift exclusion, but seem to remember that loans DO count.  But what if the loan is in dad's name?  Seems like he just paid his own loan off in that instance.

TIA!

(Side note:  why to the gnarly questions *always* come up in the last week?!?!)

[Terry D EA]

Catherine, The only way I see the loans would count toward the annual gift exclusion, is if there were an agreement stating so. Some language stating the purpose of the loan. But... is the loan portion that falls under the annual gift tax exclusion one where the money was loaned to the giftee (Is that a word) without having to repay it.  The money he gave his son to purchase the home would definitely be a gift and a gift return would be required if the amount is over the minimum of 14K.

[Catherine]

23 minutes ago, Terry D said:

The only way I see the loans would count toward the annual gift exclusion, is if there were an agreement stating so.

Sorry for being dense - are you saying that the school loan payments are NOT counted towards total gift given?  Or that they are counted?  (Except for the one in the dad's name only.)

[Terry D EA]

Catherine,

I failed to read your original post clearly. After doing so, the loan in the dad's name doesn't qualify toward the annual exclusion. As I read the article below, I don't think paying off the son's loan does either. This article clearly states the funds have to be paid to the educational institution and no one else. I have been at it since 6 this morning and am quite tired so I may not be reading the article clearly. See what you think.

https://www.wsj.com/articles/pay-tuition-without-the-gift-tax-1435599143 

[Jack from Ohio]

Gift $$$ = Down payment money and any money paid on loans that are the responsibility of the son.

WAY OVERTHINKING THIS ONE.

[Catherine]

2 hours ago, Jack from Ohio said:

loans that are the responsibility of the son

Which do NOT include the loan taken out by the dad and in his name - correct?  FBO the son's education, but not the son's loan - just the son's college.

[Jack from Ohio]

31 minutes ago, Catherine said:

Which do NOT include the loan taken out by the dad and in his name - correct?  FBO the son's education, but not the son's loan - just the son's college.

Correct.  The Dad was responsible, so no gift.