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She said that a panel of the Ninth Circuit had just heard oral argument in a case involving the parsonage allowance and wanted to know if I was available to accept an appointment to be a friend of the court and to write a brief assessing its constitutionality.
The Tax Court ruled in favor of Warren, holding that he could claim all of his housing costs as a tax-free parsonage allowance.
1), which states, "Under section 107 of the tax code, `the parsonage allowance,' as it is known, means the cost of buying, renting or repairing the rector is fully deductible.
107-1(a), the parsonage allowance is tax free if provided as remuneration for services that are ordinarily the duties of a minister of the gospel.
The Tax Court held that a parsonage allowance paid to an ordained minister used to pay the housing expenses of a second home could be excluded from income, saying the phrase "a home" used in IRC [section] 107 should be interpreted as any home, not just one.
Another change under new laws treats retirement benefits received from a church plan and any parsonage allowance provided to a minister after retirement as exempt from self-employment tax.
Under Section 107 of the tax code, "the parsonage allowance," as it is known, means the cost of buying, renting or repairing the rector is fully deductible.
For example, if a minister receives a $12,000 parsonage allowance and $48,000 of other compensation, the disallowance percentage would be 20% ($12,000 [divided by] ($12,000 + $48,000)).
In addition Congress in 1996 excluded the parsonage allowance from self-employment taxes after the cleric retires, making denominational plans especially attractive.
In Letter Ruling 9231053, the IRS considered whether an ordained minister qualified for the benefits of a tax-free parsonage allowance.
Warren, 282 F3d 1119, the appeals court reviewed a Tax Court decision allowing Warren, a minister, and his wife to exclude up to $80,000 of parsonage allowance.
Retirement benefits and parsonage allowances paid to ministers after retirement are no longer subject to self-employment tax, retroactive to 1994.