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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 to
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