- 7 - legislative history, limits the amount that may be excluded from income as a parsonage allowance under section 107(2) to the fair market rental value of the residence occupied. A rental allowance excludable under section 107(2) may be used (1) to rent a home, (2) to purchase a home, and (3) to pay expenses directly related to providing a home. See sec. 1.107-1(c), Income Tax Regs. Section 107(1) limits the exclusion to the rental value of a home furnished as part of a minister’s compensation. In contrast, no fair rental value limit is stated in section 107(2) or the regulations issued thereunder. We have previously held that, under section 107(2), the fair rental value of a minister’s home is not excludable to the extent that it exceeds the amount the minister uses to provide housing. See Reed v. Commissioner, 82 T.C. 208, 214 (1984). In Reed, we were not required, and thus declined, to decide the issue here; i.e., whether the exclusion under section 107(2) is limited to the lesser of fair rental value or the amount used for housing. See id. We said: The trouble with petitioners’ analysis is that the Congress, faced with the “rental value” language of section 107(1), did not choose to use such language in section 107(2). Instead, the Congress provided that the exclusion applies to “the rental allowance paid * * *, to the extent used by [the minister] to rent or provide a home.” (Emphasis added.) Thus, the Congress clearly provided a different measure for the exclusion under section 107(2) than the measure provided under section 107(1). Petitioners have failed to show us a policy problem so overwhelming as to force us toPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011