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On audit, for Federal income tax purposes, respondent
determined that petitioner was to be treated as an employee of
the United Methodist Church and not as a self-employed minister.
Respondent therefore disallowed petitioners’ claimed Schedule C
business expenses of $10,605 and $19,314 for 1990 and 1991,
respectively, relating to petitioner’s work as a minister.
Respondent determined that these expenses should be deducted only
as miscellaneous expenses on Schedule A of petitioners’ income
tax returns and allowable only to the extent that the expenses
exceed 2 percent of petitioners’ adjusted gross income.
For self-employment tax purposes, respondent determined that
petitioners’ calculation of self-employment income was
underreported. Respondent increased petitioner’s total self-
employment income to $52,870 for 1990 and $50,903 for 1991.
Respondent’s adjustments, a number of which are now agreed to,
were based primarily on an increase in the value of the
parsonages and an increase in the amounts petitioners reported as
relating to utility and other household expenses of the
parsonages. Respondent, for 1985, 1990, and 1991, also
determined the late filing additions to tax against petitioners.
The parties now stipulate that in 1990, the parsonage in
Hurst had a fair rental value of $500 per month, and that in 1990
and 1991, the parsonage in Waco had a fair rental value of $1,200
per month.
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Last modified: May 25, 2011