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crusades. FOL had loyal followers, some who attended worship
services held regularly in Greenville, and others who attended
crusades held regularly in various cities. Many of FOL's members
were not associated with any other religious organization or
denomination. In essence, FOL had the requisite body of
believers, and, therefore, Ray and Larry performed services under
the authority of a church. In addition, Larry and Ray were
"authorized to administer the sacraments, preach, and conduct
services of worship" and were ordained ministers of the Gospel.
Salkov v. Commissioner, 46 T.C. 190, 194 (1966).
The housing allowances are excludable only to the extent
such allowances were authorized, paid, and expended for housing.
See sec. 107(2). Accordingly, Larry is allowed to exclude
$52,000, $25,903, and $25,608, and Ray is allowed to exclude
$35,738, $40,500, and $25,733, relating to 1985, 1986, and 1987,
respectively.
II. Unreported Income
A. Payments From FOL
Respondent determined that Larry's and Ray's travel
reimbursements were taxable income. Generally, an employee is
not required to report reimbursements received from an employer
for travel expenses incurred by the employee, for the benefit of
the employer, if the employee makes an "adequate accounting" to
his employer. Sec. 1.274-5(e)(2)(i), Income Tax Regs. (requiring
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