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OPINION
For Federal income tax purposes, an ordained minister of a
church may be treated as an employee or as a self-employed
individual. The resolution of this issue affects the manner and
extent to which related expenses may be deducted on a minister’s
income tax return. If a minister is treated as an employee of
the church, the minister’s expenses will be deductible only on
Schedule A of the income tax return subject to a 2-percent floor.
If a minister is treated as a self-employed individual, the
minister’s expenses will be fully deductible as business expenses
on Schedule C of the income tax return.
Whether a minister, for Federal income tax purposes, is
treated as an employee or as a self-employed individual has no
effect upon a minister’s self-employment tax liability because
under section 1402(c)(2)(D) a minister’s income is treated as
self-employment income. However, in order to determine whether
petitioner’s expenses are deductible for income tax purposes on
Schedule A or Schedule C of petitioners’ income tax returns, we
must determine whether petitioner is to be treated as an
employee.
Whether an employer/employee relationship exists in a
particular situation involves a question of fact. Weber v.
Commissioner, 103 T.C. 378, 386 (1994), affd. per curiam 60 F.3d
1104 (4th Cir. 1995); Professional & Executive Leasing, Inc. v.
Commissioner, 89 T.C. 225, 232 (1987), affd. 862 F.2d 751 (9th
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Last modified: May 25, 2011