DocketNumber: Docket No. 1070-07.
Citation Numbers: 2010 U.S. Tax Ct. LEXIS 45, 135 T.C. No. 27, 135 T.C. 557
Judges: CHIECHI,WELLS,THORNTON,HOLMES,PARIS,MORRISON,MARVEL,WHERRY,THORNTON,HOLMES,GUSTAFSON,COLVIN,HALPERN,GALE,GOEKE,KROUPA
Filed Date: 12/14/2010
Status: Precedential
Modified Date: 11/20/2020
Decision will be entered under
During each of the years at issue, an organization exempt from tax under
For each of their taxable years at issue, petitioners (Ps) excluded from gross income under
*558 CHIECHI,
1996 | $64,905 | $48,678.75 |
1997 | 83,512 | 62,634.00 |
1998 | 107,562 | 80,671.59 |
1999 | 149,880 | 112,410.00 |
The only issue remaining for decision is whether petitioners are entitled for each of their taxable years 1996 through 1999 to exclude from gross income under
All of the facts in this case, which the parties submitted under
Petitioners resided in Georgia at the time they filed the petition in this case.
During each of the years 1996 through 1999, petitioner Philip A. Driscoll (Mr. Driscoll) was an ordained minister who worked for Mighty Horn Ministries, Inc., later known as Phil Driscoll *47 Ministries, Inc. (We shall refer to Mighty Horn Ministries, Inc., later known as Phil Driscoll Ministries, Inc., as the Ministries.) During each of those years, the Ministries was an organization described in
During each of the years 1996 through 1999, petitioners owned more than one residence or home; they owned a principal residence or home in Cleveland, Tennessee (Cleveland home), and a second residence or home at the Parksville Lake Summer Home area of the Cherokee National Forest in *559 Lake Ocoee (lake second home), near Cleveland, Tennessee. Petitioners owned one lake second home from January 1996 through April 1998, which they sold in April 1998, and another lake second home from April 1998 through 1999. 2*48 During the years 1996 through 1999, petitioners used their Cleveland home solely as a residence and their lake second home solely as a residence. At no time during those years did petitioners use their Cleveland home or their lake second home for any commercial purposes, such as rental purposes.
For each of the years at issue, the Ministries filed Form 990, Return of Organization Exempt From Income Tax, in which it claimed an amount described as "parsonage allowance" (Ministries parsonage allowance). That amount represented the total amount that the Ministries paid during each of those years with respect to petitioners' Cleveland home and their lake second home for the acquisition and maintenance of those homes, including mortgage payments, utilities, furnishings, improvements, and maintenance, such as lawn care, painting, and repairs.
In the tax return that petitioners filed for each of the years 1996 through 1999, they did not include the Ministries parsonage allowance in gross income.
Respondent issued a notice of deficiency (notice) to petitioners for their taxable years 1996 through 1999. In that notice, respondent determined, inter alia, that petitioners are not entitled for any of those years to exclude from gross income under
1996 | $25,842.53 |
1997 | 70,707.50 |
1998 | 116,309.11 |
1999 | 195,778.52 |
Petitioners bear the burden of proving that the determinations in the notice that remain at issue are erroneous. See
We must decide an issue of first impression, namely, whether petitioners are entitled for each of the years at issue to exclude from gross income under
In the case of a minister of the gospel, gross income does not include-- (1) the rental value of a home furnished to him as part of his compensation; or (2) the rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home.
In support of their position that they are entitled for each of the years at issue to exclude from gross income under The only limitation expressed by Congress in
In support of respondent's position that petitioners are not entitled for each of the years at issue to exclude from gross income under allowed 4*52 a minister one parsonage allowance for a home.
An exclusion from gross income first appeared in
Congress reenacted as
When Congress enacted the 1954 Code, it also expanded the excludible parsonage allowance in
In expanding the excludible parsonage allowance in
Respondent acknowledges that petitioners' second residence in Lake Ocoee is a home of petitioners, albeit a second home. 11*58 Nonetheless, respondent argues that the Ministries parsonage allowance with respect to that home is not excludible under
Respondent is substituting in SEC. 7701(m). Cross References.-- (1) Other definitions.-- For other definitions, see the following sections of Title 1 of the United States Code: (1) Singular as including plural, section 1. In determining the meaning of any *62 Act of Congress, unless the context indicates otherwise-- words importing the singular include and apply to several persons, parties, or things; * * *
As pertinent here,
We hold that the portion of the Ministries parsonage allowance that the Ministries paid to Mr. Driscoll as part of his compensation during each of the years at issue and that he used during each of those years to provide for himself a lake second home satisfies the requirements in
We have considered all the contentions and arguments of the parties that are not discussed herein, and we find them to be without merit, irrelevant, *67 and/or moot. 19
*567 To reflect the foregoing and petitioners' concessions in the stipulation of settled issues,
Reviewed by the Court.
WELLS, THORNTON, HOLMES, and PARIS, JJ., agree with this majority opinion.
MORRISON,
MARVEL,
WHERRY,
As noted in the majority opinion the word "home" in
For many *68 years courts have interpreted statutory provisions in accordance with their common meaning. "'The legislature must be presumed to use words in their known and ordinary signification.' * * * 'The popular or received import of words furnishes the general rule for the interpretation of public laws.'"
By design of the parties, this case was submitted for decision under
That question was effectively resolved when the parties stipulated that 6. The parsonage allowance paid by the Ministry covered the following properties: *568 a. During all of the years at issue, a residence at 345 Davis Trail NW, Cleveland, Tennessee that constituted the principal residence of Mr. *69 Driscoll and his family. b. A second residence at the Parksville Lake Summer Home area of the Cherokee National Forest, Lake Oconee, near Cleveland, Tennessee. There were two properties owned during this period, one from January, 1996 through April, 1998, which was sold in April, 1998, and a second one from April, 1998, through December 31, 1999; and 8. Each of these properties was used solely as a personal residence and not for any commercial purposes. None of the properties was rented.
Necessarily absent from our consideration of this case are important regulatory considerations which were not fully addressed in the stipulation or on brief. See
THORNTON and HOLMES,
*569 GUSTAFSON,
I.
In addition to the mere fact that the indefinite article "a and the word "home" are both singular, 1 there are two features of
In common usage, a person has one "home", 2*74 and the word therefore has a connotation of singularity. The majority evidently discounts this connotation because the 1954 Congress*570 that replaced the prior "a dwelling house and appurtenances thereof" with "a home" stated that it intended no substantive change. 3 That Congress, however, *73 used the word "home" in its description of then-present law: Under present law, the rental value of
In this vein, the IRS contends (in its reply brief at 3-4 (emphasis added)): [T]he legislative history and regulations allow a minister to exclude from income the payments from a religious organization for the home--the dwelling place--
However many "homes" or "second homes" a minister may have, he can use only one of them *75 at a time. If a minister were to use an allowance to provide a principal residence for himself and were to use a second allowance to pay for a second house that he never occupied, the exclusion of *571
On the other hand, if a minister were to split his year between two "homes" in both of which he
The "to the extent" limitation in
The majority states that the original congressional rationale for the parsonage exclusion in 1921 is "obscure". Majority op. p. 7. This is hardly a warrant for interpreting the provision broadly to exclude multiple allowances for houses unoccupied for some or all of the year. It is impossible to substantiate, and difficult even to imagine, a congressional motive to extend the exclusion of
*572 The *77 majority asserts that it approves today only the exclusion of an allowance on a
It is true that there are scenarios in which a minister may work in (and therefore reside in) several ministry locations. For example, a minister may be an itinerant evangelist; another minister in a sparsely populated area may serve multiple congregations that are distant from each other; and another minister may have seasonal duties in different locations. A narrow interpretation of
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
COLVIN, HALPERN, GALE, GOEKE, and KROUPA,
1. Unless otherwise indicated, all section references are to the Internal Revenue Code (Code) in effect for the years at issue. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Petitioners thus owned two second homes at different times during 1998. That fact is not material to our resolution of the issue presented. For convenience, we shall refer herein in the singular to a lake second home or petitioners' lake second home even when discussing 1998.
3. Respondent did not determine to include in gross income for any of petitioners' taxable years 1996 through 1999 the portion of the Ministries parsonage allowance that the Ministries paid during each of those years with respect to petitioners' Cleveland home. As a result, respondent did not determine to include the following amounts in petitioners' gross income for the years indicated:
1996 | $78,469 |
1997 | 42,708 |
1998 | 71,704 |
1999 | 87,254 |
4. Respondent uses the past tense in describing
5. For convenience, we shall sometimes refer to the allowance that is, or was, excludible from gross income under
6. According to respondent, The Senate Committee Report does not mention the provision
7. When it enacted The word "home" as used in both paragraphs
8. Congress described "the discrimination in existing law" as follows: Under present law, the rental value of a home furnished a minister of the gospel as a part of his salary is not included in his gross income. This is unfair to those ministers who are not furnished a parsonage, but who receive larger salaries (which are taxable) to compensate them for expenses they incur in supplying their own home.
9. Congress explained the phrase "to the extent used by him to rent or provide a home" that it added at the end of The term "home" includes the case where furnishings are also included. It does not cover cases where a minister, in addition to the home, rents a farm or business property, except to the extent that the total rental paid can be allocated to the home itself and the necessary appurtenances thereto, such as a garage.
10. Where the minister rents, purchases, or owns a farm or other business property in addition to a home, the portion of the rental allowance expended in connection with the farm or business property shall not be excluded from his gross income.↩
11. Respondent acknowledges throughout respondent's briefs that petitioners' residence in Lake Ocoee is a home of Mr. Driscoll, albeit a second home, since he had another home or residence, i.e., his principal home or residence, in Cleveland, Tennessee. For example, respondent asserts on brief: petitioners are not entitled to exclude from income on their federal income tax returns as a parsonage allowance amounts paid to or on behalf of Driscoll by Ministries for any second homes, "lake houses" on Lake Ocoee, during their taxable years 1996, 1997, 1998, and 1999 under * * * * * * * * * * * petitioners excluded from income as a parsonage allowance amounts paid to or on behalf of Driscoll for second homes, "lake houses" on Lake Ocoee, by Ministries * * *.
12. See H. Rept. 1337,
13. (b) For purposes of (c) A rental allowance must be included in the minister's gross income in the taxable year in which it is received, to the extent that such allowance is not used by him during such taxable year to rent or otherwise provide a home. Circumstances under which a rental allowance will be deemed to have been used to rent or provide a home will include cases in which the allowance is expended (1) for rent of a home, (2) for purchase of a home, and (3) for expenses directly related to providing a home. Expenses for food and servants are not considered for this purpose to be directly related to providing a home. Where the minister rents, purchases, or owns a farm or other business property in addition to a home, the portion of the rental allowance expended in connection with the farm or business property shall not be excluded from his gross income.↩
14. On brief, respondent expressly abandons any argument that the phrase "a home" used in Petitioners mistakenly allege that respondent's position is that "a home" as used in the statute Respondent has not defined home as used in
On brief, respondent also expressly abandons any argument that the phrase "away from home" in Petitioners then quote from
15. On brief, respondent also asserts: Respondent maintains that the legislative history and regulations allow a minister to exclude from income the payments from a religious organization for the home--the dwelling place--where the minister lives. In the case of the petitioners, they may own and visit recreational lake houses or other houses, but their home where they live is 345 Davis Trail NW, Cleveland, TN. [petitioners' Cleveland home].
16. In support of respondent's position as to the meaning of the phrase "a home" in
17. We have consistently required "unequivocal" evidence of legislative purpose before construing a section of the Code in a manner that would override the plain meaning of the words used in the section. See, e.g.,
18. Respondent does not dispute that petitioners are entitled to exclude from gross income under
19. We shall address briefly respondent's concern that holding for petitioners in the instant case will "open the door to an unlimited number of residential properties being treated as parsonages for one minister." Respondent is speculating about cases that are not before us. We decline to do so. We have decided on the basis of the facts that the parties stipulated and the respective arguments that they advance only the issue pre-sented to us in this case.↩
1. To persons living in densely populated areas this may seem anomalous. But in the sparsely populated rural West and Alaska, a minister of the gospel may serve a congregation covering a geographic area considerably larger than the State of Rhode Island. In such a situation, the minister may well need more than one home, particularly in mountainous areas with sometimes severe winter weather.↩
1. The statute's use of a singular article and noun is not decisive of this question for the reason that Mr. Driscoll argues and that the majority stresses, majority op. p. 16: "unless the context indicates otherwise * * * words importing the singular include and apply to several * * * things".
2. The leading (non-obsolete) definition of "home" in the
3. See majority op. pp. 8-9 & note 7 (citing H. Rept. 1337, 83d Cong., 2d Sess. A35 (1954); S. Rept. 1622, 83d Cong., 2d Sess. 186 (1954)).↩
4. If a minister who maintains his
5. The minister who is required to be temporarily away from home and to pay for a hotel or other temporary housing may be entitled to deduct that expense under
Orange County Agricultural Society, Inc. v. Commissioner of ... , 893 F.2d 529 ( 1990 )
Fields v. Commissioner of Internal Revenue , 189 F.2d 950 ( 1951 )
Ludwig H. Brandl v. Commissioner of Internal Revenue , 513 F.2d 697 ( 1975 )
Richard J. Borchers Jane E. Borchers v. Commissioner of ... , 943 F.2d 22 ( 1991 )
Old Colony Railroad v. Commissioner , 52 S. Ct. 211 ( 1932 )
Church of Gospel Ministry, Inc. v. United States , 640 F. Supp. 96 ( 1986 )
Welch v. Helvering , 54 S. Ct. 8 ( 1933 )
United States v. Burke , 112 S. Ct. 1867 ( 1992 )