A church provided its pastor with an office on the church campus, and a $12,000 per year housing allowance. The pastor rented a 1,200 square foot house in which he dedicated one room, approximately one-third of the house, for use as an additional pastor's office. He purchased supplies, including computer software, computer accessories, books, pens, pencils, paper, and printer cartridges, for use in his home office. The church did not reimburse him for these supplies. He spent most of his professional time in his home office but met with parishioners only at the office the church provided.
In addition, the pastor used his automobile to make hospital and sick visits and to organize community events. He also traveled throughout the state in connection with his position as vice president of the state church convention.
The church treated the pastor as an independent contractor for income tax reporting purposes, and issued him a Form 1099-MISC each year. On the basis of the independent nature of his relationship with the church, he reported his income and expenses on a Schedule C.
The pastor's tax return for 2008 reported income of $89,000, and various deductions including "books," supplies, bank fees, uniform and dry cleaning, professional dues, travel meals and entertainment, and a home office. The IRS denied the deductibility of several of these expenses, and the pastor appealed to the United States Tax Court.