As an executive of Boeing, Steve receives fringe benefits in the form of annual tuition scholarships of $10,000 for each of his three children. The scholarships are paid by the company on behalf of the children of key employees and are payable only if the student maintains a B average. The tuition payments of $30,000 may be excluded from the children's gross income as a scholarship. The tuition payments of $30,000 must be included in Steve's gross income. The tuition payments of $10,000 each must be included in each child's gross income The tuition payments of $30,000 may be excluded from Steve's gross income