Paul L. Caron

Wednesday, December 15, 2010

Divided Tax Court Allows Parsonage Allowance for Minister's Two Homes

Tax Court A sharply divided Tax Court (5-2-6) yesterday held that Christian singer Phil Driscoll and his wife could exclude from income parsonage allowances on both their principal residence and a vacation home in these amounts:


Principal Residence

Vacation Home













Discoll v. Commissioner, 135 T.C. No. 27 (Dec. 14, 2010). The five-judge majority opinion concluded that the phrase "a home" in § 107 includes more than one home:

Respondent is substituting in § 107, its legislative history, and the regulations under § 107 the phrase "a single home" or the phrase "one home" for the phrase "a home" that appears in the statute and the other authorities on which respondent relies. We find nothing in § 107, its legislative history, or the regulations under § 107, which, as respondent points out, all use the phrase "a home", that allows, let alone requires, respondent, or us, to rewrite that phrase in § 107. We are not persuaded by those authorities that Congress intended to allow, let alone did allow, in § 107 an excludible parsonage allowance only for a single home or one home of a minister. Indeed, § 7701(m)(1) rejects respondent's position that the phrase "a home" in § 107 means a "single home" or "one home". Section 7701(m)(1) provides: ... "Singular as including plural" ...

Judge Morrison concurred in the result only. Judge Wherry wrote a separate concurring opinion to "emphasize the limited factual record on which this case was decided. As noted in the majority opinion the word "home" in  § 107 should, after application of  § 7701(m), be read to mean home or homes." ... Necessarily absent from our consideration of this case are important regulatory considerations which were not fully addressed in the stipulation or on brief. See [Reg.] § 1.107 1(a), which specifies that "In order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel. In general, the rules provided in § 1.1402(c)-5 will be applicable to such determination." This consideration necessarily involves factual questions of why the remuneration was provided and whether it was reasonable compensation and may indirectly raise issues of private benefit and personal inurement, none of which were considered here."

The six-judge dissent argued that § 107 does not include from income a paersonage allowance for two residences:

The chance that Congress in 1954 thought it was permitting the exclusion of multiple parsonage allowances seems remote. There is therefore no reason not to apply the general rule that exclusions are construed narrowly. I would apply that general rule here and hold that § 107(2) excludes only an allowance used to provide the single home where the minister actually resides.

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What do the vote numbers 5-2-6 mean?

Posted by: Mark S Nelson Sr, EA, ABA | Dec 29, 2010 9:11:37 AM

Although commonly referred to as the "majority opinion" there is NO SUCH THING as a MAJORITY OPINION in a Tax Court case, such as this one, as the opinion that is the binding authority garnered less than half the votes--and less votes than the dissent.

Proper terminology (even when the opinion consists of a majority of the voting Judges) for the opinion that begins on page 1 and ends with "Reviewed by the Court" are the "Court Reviewed" opinion or the "Lead" opinion. The lead opinion is binding authority, although, like other appeals courts, the Tax Court has been known to reverse its position in Court Reviewed opinions--usually when the position of the court has been rejected by multiple/numerous Courts of Appeals or even quickly when Judges change their mind or which Judges vote changes.

Dissents are dissents. Concurring opinions are concurring opinions and are not binding authority even if a concurring opinion gains more votes than the lead opinion. The Lead/Court Reviewed opinion is the law.

Posted by: tax guy | Dec 15, 2010 7:28:26 PM