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Discussion
A. Respondent’s Contentions
Respondent contends that the exclusion under section 107(2)
may not exceed the lesser of the amount used to provide a home or
the fair market rental value of the home. Respondent contends
that permitting a greater exclusion in the reporting of
compensation would be contrary to the “rental” language in the
statute and also contrary to the concern for equality among
ministers stated in the legislative history accompanying
enactment of section 107(2) in 1954. We disagree for reasons
stated next.
B. Section 107
Compensation for services is generally included in gross
income for purposes of calculating Federal income taxes. See
sec. 61(a)(1). However, section 107 provides the following
exception:
SEC. 107. RENTAL VALUE OF PARSONAGES.
In the case of a minister of the gospel, gross
income does not include–-
(1) the rental value of a home furnished
to him as part of his compensation; or
(2) the rental allowance paid to him as
part of his compensation, to the extent used
by him to rent or provide a home.
Contrary to respondent’s position, neither section 107(2),
the regulations promulgated thereunder, nor the related
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