Bradley M. and Monica Pixley - Page 1

                                   123 T.C. No. 15                                    

                               UNITED STATES TAX COURT                                

                    BRADLEY M. AND MONICA PIXLEY, Petitioners v.                      
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 7093-02L.         Filed September 15, 2004.                 

                    H is an ordained Baptist minister.  In this                       
               proceeding to collect Ps’ unpaid 1992 and 1993 tax                     
               liabilities by levy, Ps submitted to R’s Appeals Office                
               an offer in compromise, claiming a “tithe to church” as                
               part of their necessary living expenses.  In evaluating                
               Ps’ ability to pay their outstanding tax liabilities,                  
               the Appeals officer declined to take these alleged                     
               tithing expenses into account.                                         
                    Held:  Under relevant provisions of the Internal                  
               Revenue Manual, tithes that a minister is required to                  
               pay as a condition of employment are allowable in                      
               determining ability to pay outstanding tax liabilities.                
               Held, further, because Ps failed to substantiate that H                
               was employed as a Baptist minister after R initiated                   
               the collection proceedings, the Appeals officer did not                
               abuse his discretion by declining to take into account                 
               Ps’ alleged tithing expenses.  Held, further, the                      
               disallowance of Ps’ alleged tithing expenses for this                  

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