(a) In the case of a minister of the gospel, gross income does not include (1) the rental value of a home, including utilities, furnished to him as a part of his compensation, or (2) the rental allowance paid to him as part of his compensation to the extent such allowance is used by him to rent or otherwise provide a home. In order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel. In general, the rules provided in § 1.1402(c)-5 will be applicable to such determination. Examples of specific services the performance of which will be considered duties of a minister for purposes of section 107 include the performance of sacerdotal functions, the conduct of religious worship, the administration and maintenance of religious organizations and their integral agencies, and the performance of teaching and administrative duties at theological seminaries. Also, the service performed by a qualified minister as an employee of the United States (other than as a chaplain in the Armed Forces, whose service is considered to be that of a commissioned officer in his capacity as such, and not as a minister in the exercise of his ministry), or a State, Territory, or possession of the United States, or a political subdivision of any of the foregoing, or the District of Columbia, is in the exercise of his ministry provided the service performed includes such services as are ordinarily the duties of a minister.
(b) For purposes of section 107, the term “home” means a dwelling place (including furnishings) and the appurtenances thereto, such as a garage. The term “rental allowance” means an amount paid to a minister to rent or otherwise provide a home if such amount is designated as rental allowance pursuant to official action taken prior to January 1, 1958, by the employing church or other qualified organization, or if such amount is designated as rental allowance pursuant to official action taken in advance of such payment by the employing church or other qualified organization when paid after December 31, 1957. The designation of an amount as rental allowance may be evidenced in an employment contract, in minutes of or in a resolution by a church or other qualified organization or in its budget, or in any other appropriate instrument evidencing such official action. The designation referred to in this paragraph is a sufficient designation if it permits a payment or a part thereof to be identified as a payment of rental allowance as distinguished from salary or other remuneration.
(c) A rental allowance must be included in the minister's gross income in the taxable year in which it is received, to the extent that such allowance is not used by him during such taxable year to rent or otherwise provide a home. Circumstances under which a rental allowance will be deemed to have been used to rent or provide a home will include cases in which the allowance is expended (1) for rent of a home, (2) for purchase of a home, and (3) for expenses directly related to providing a home. Expenses for food and servants are not considered for this purpose to be directly related to providing a home. Where the minister rents, purchases, or owns a farm or other business property in addition to a home, the portion of the rental allowance expended in connection with the farm or business property shall not be excluded from his gross income.
[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 6691, 28 FR 12817, Dec. 3, 1963]
Notes of Decisions
Cited in
33
cases, 1961–2013 · leading case:
Eden v. Comm'r, 41 T.C. 605 (Tax Ct. 1964).
Eden v. Comm'r, 41 T.C. 605 (Tax Ct. 1964).
· cites it 6× “We need not decide whether petitioner was a "minister of the gospel" within the purview of section 107 since the evidence clearly establishes that no part of petitioner's compensation from the Highland Baptist Church for the years in issue was designated as a rental allowance.”
Reed v. Comm'r, 82 T.C. 208 (Tax Ct. 1984).
· cites it 4× “" The language of the statute requires a payment to the minister and a use of that payment. Section 1.107-1(c), Income Tax Regs.”
Libman v. Comm'r, 44 T.C.M. 370 (Tax Ct. 1982).
· cites it 12× “To qualify for this exclusion, respondent's regulations require that (1) the allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel ( section 1.”
Lawrence v. Comm'r, 50 T.C. 494 (Tax Ct. 1968).
· cites it 4× “The regulations are only intended to apply to persons otherwise qualified as ministers of the gospel who are engaged in teaching and administrative duties at theological seminaries or engaged in other named church or religious activities.”
Colbert v. Comm'r, 61 T.C. 449 (Tax Ct. 1974).
· cites it 4× “, provides, in pertinent part, as follows: (a) In the case of a minister of the gospel, gross income does not include (1) the rental value of a home, including utilities, furnished to him as a part of his compensation, or (2) the rental allowance paid to him as part of his…”
Good v. Comm'r, 2012 T.C. Memo. 323 (Tax Ct. 2012).
· cites it 4× “See also sec. 1.107-1, Income Tax Regs. A minister is an individual "authorized to administer the sacraments, preach, and conduct services of worship.”
Driscoll v. Comm'r, 135 T.C. 557 (Tax Ct. 2010).
· cites it 8× “" 9 *56 That phrase precludes the exclusion from *563 gross income of any portion of a rental allowance paid to a minister that is expended in connection with a farm or other business property.”
Kirk v. Comm'r, 51 T.C. 66 (Tax Ct. 1968).
· cites it 2× “, provides that in order to qualify for the exclusion, the rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel.”
Mosley v. Comm'r, 68 T.C.M. 708 (Tax Ct. 1994).
· cites it 18× “1402(c)-5(b)(2)(ii), Income Tax Regs. , such that parsonage rental allowances paid for 1989 and 1990 were excludable from gross income under sec.”
Boyd v. Comm'r, 42 T.C.M. 1136 (Tax Ct. 1981).
· cites it 18× “Section 107(2) permits a minister of the gospel to exclude from his gross income the part of his compensation which is a "rental allowance" to the extent he actually uses that allowance to provide himself a home.”
Ling v. United States, 200 F. Supp. 282 (D. Minnesota 1961).
· cites it 2× “Treasury Regulations set forth in 26 C.F.R. Section 1.107-1 (b) provide as follows: “(b) * * * The term ‘rental allowance’ means an amount paid to a minister to rent or otherwise provide a home if such amount is designated as rental allowance pursuant to official action taken…”
Chambers v. Comm'r, 2011 T.C. Memo. 114 (Tax Ct. 2011).
· cites it 2× “, which provides: The term "rental allowance" means an amount paid to a minister to rent or otherwise provide a home * * * if such amount is designated as rental allowance pursuant to official action taken in advance of such payment by the employing church or other qualified…”
— 26 C.F.R. § 1.107-1(b) — 1 case
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