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the application must be made on Form 4361, in triplicate, with
the specified office of the Internal Revenue Service, within the
prescribed time limit.
The time limitations of section 1402(e) are mandatory and
must be complied with strictly. Treadway v. Commissioner, T.C.
Memo. 1984-153; Allinson v. Commissioner, T.C. Memo. 1979-405.
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. Petitioners, however, failed
to present to respondent the appropriate Form 4361 until the
examination of the return for 2000. Petitioner failed to obtain
an exemption, and his net earnings from his ministry are
therefore subject to self-employment tax.
The term “net earnings from self-employment” means the gross
income of a taxpayer’s trade or business less the allowable
deductions attributable to the trade or business. Sec. 1402(a).
In computing the gross income and deductions, a minister must
compute his net earnings from self-employment, as a licensed
minister in the exercise of his ministry, without regard to
section 107, which exempts amounts for parsonage. Sec.
1402(a)(8), (c)(4). In other words, the parsonage allowance is
part of a minister’s gross income from his trade or business for
purposes of self-employment tax. Bass v. Commissioner, T.C.
Memo. 1983-536; sec. 1.1402(a)-11, Income Tax Regs.
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