Richard D. Warren and Elizabeth K. - Page 5




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          premiums.1  Based on these expenditures, petitioners excluded               
          from income on their 1993 return all of petitioner’s compensation           
          from the church and reported as income $9,866 in 1994 and $19,654           
          in 1995.                                                                    
               The amounts remaining in dispute are the differences                   
          between the rental values of petitioners’ home and the amounts              
          petitioners excluded from their returns.  The following table               
          summarizes relevant financial information:                                  
                                                            Amount in dispute         
                                                            (i.e., amount             
          Taxable  Compensation      HousingAmount excludedRental valueexcluded less rental      
          year    received      expenditures     from incomeof home    value of home)           
          1993 $77,663   $77,663   $77,663        $58,061        $19,602              
          1994 86,175    76,309    76,309         58,004         18,305               
          1995 99,653    84,278    79,999         59,479         20,520               

               Petitioners reported that petitioner had net Schedule C,               
          Profit and Loss From Business, income from his tape and book                
          ministry of $183,635 in 1993, $217,770 in 1994, and $221,401 in             
          1995, and total income (not including the housing allowance paid            
          by the church to the extent excluded by petitioners from their              
          gross income) of $187,652 for 1993, $219,919 for 1994, and                  
          $241,238 for 1995.2                                                         


               1  The parties stipulated that all of these expenditures               
          were used to provide housing.                                               
               2  Although the record is silent as to why petitioners                 
          excluded only $79,999 when they spent $84,278 on housing for                
          1995, we infer that it was because the church designated an                 
          $80,000 housing allowance for the church’s 1996 fiscal year.                




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