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NIMS, J., dissenting: I respectfully dissent. The facts of this
case present an archetypical example of the potential for abuse
now sanctioned by the majority. For the first 3 of its 4 fiscal
periods here involved, the Saddleback Valley Community Church
designated 100 percent of petitioner’s compensation as a housing
allowance. Yet petitioners, with other income (largely Schedule
C income) near or in excess of $200,000 for each of the taxable
years at issue, are nevertheless awarded an exclusion from tax of
substantially all of petitioner’s salary. (The parties
stipulated that the rental value of petitioner’s residence, in
all relevant taxable years, was an amount that was a great deal
less than petitioner’s salary in those years.)
Moreover, with funds available from the above-mentioned
alternative sources to cover living expenses otherwise necessary
but unrelated to providing a home, petitioners were at liberty
to, and did, spend nearly all compensation for the betterment of
their residence. Contrary to the majority, I am satisfied that
the rental allowance of section 107(2) was not intended to
operate in this manner. I believe that both the statutory
language and the legislative history counsel a different result,
and I disagree with the majority’s reading of these sources.
As regards the statutory text, section 107(2) excludes from
a minister’s income “the rental allowance paid to him as part of
his compensation, to the extent used by him to rent or provide a
home.” (Emphasis added.) The majority’s interpretation,
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