During the current year, Alexis gives her daughter Tabatha stocks worth $80,000 on the condition that she pay her son Rory the first $7,000 in dividends on the stock each year. Discuss the taxability of this arrangement in each of the following cases:
a. The stocks pay total dividends of $8,000. Tabatha pays Rory $7,000 under the agreement.
b. The stocks pay total dividends of $5,500. Tabatha pays Rory $5,500 under the agreement.