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Pentecostal, Inc. (Church) on August 14, 1981. Petitioner filed
returns reporting net earnings from self-employment from his
ministry in the years 1992 through 1999 averaging more than
$2,400 a year.
As senior pastor of the Church in Inglewood, California,
petitioner was paid a salary of $78,000 of which the Church
designated $42,000 as a parsonage allowance and $36,000 as wages.
In addition to the salary received from the Church, petitioner
received self-employment income of $21,438 in the exercise of his
ministry. During the audit of petitioners’ return for 2000,
petitioner applied for and was denied an exemption from self-
employment tax.
Discussion
Because there are no factual matters in dispute in this
case, section 7491 is inapplicable.
Allocation of Expenses
Section 107 provides that for a minister of the Gospel, the
rental value or rental allowance used to provide a home is
excluded from gross income when it is part of compensation.
Petitioner received such a parsonage allowance for the taxable
year at issue, and respondent agrees that the parsonage allowance
is properly excludable under section 107.
Respondent argues, however, that some of the expenses
claimed as ministry expenses are allocable to petitioner’s tax-
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