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an allowance (as determined by the institution) for
room and board costs incurred by the student which --
(A) shall be an allowance of not less than
$1,500 for a student without dependents
residing at home with parents;
(B) for students without dependents residing
in institutionally owned or operated housing,
shall be a standard allowance determined by
the institution based on the amount normally
assessed most of its residents for room and
board; and
(C) for all other students shall be an
allowance based on the expenses reasonably
incurred by such students for room and board,
except that the amount may not be less than
$2,500. [Emphasis added.]
20 U.S.C. sec. 1087ll(3) (Supp. IV 1998).11
Petitioners contend that their total room and board expenses
of $42,275 qualify as higher education expenses. In contrast,
respondent contends that the amount of room and board expenses
that qualify as higher education expenses is limited under
section 529(e)(3)(B)(ii). We agree with respondent.
There is no dispute that room and board expenses related to
Mrs. Kandil’s education qualify as higher education expenses.
The amount that can qualify as higher education expenses,
however, is specifically limited by statute. As stated earlier,
11 We note that the Higher Education Amendments of 1998,
Pub. L. 105-244, sec. 471(2)(B), 112 Stat. 1729, deleted the
phrase “except that the amount may not be less than $2,500”,
effective for tax years beginning after Dec. 31, 2001. This
amendment, however, does not apply in the instant case.
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