No Allowances for Two Homes
Federal appeals court reverses controversial Driscoll decision.

Driscoll v. Commissioner, 2012-1 U.S.T.C. ¶50,187 (11th Cir. 2012)

In 2010, the United States Tax Court ruled that a minister could apply a housing allowance to expenses incurred in owning two homes. This ruling was recently reversed by a federal appeals court. The facts of the case and the court's ruling are summarized below, along with a discussion of the relevance of the case to churches and clergy.

Facts

An ordained minister was employed by a parachurch ministry. He owned a principal residence and a vacation home. At no time did he use either home for commercial purposes (i.e., as rental property). The ministry designated a housing allowance for him each year that he used for the payment of expenses on both homes, including mortgage payments, utilities, furnishings, improvements, and maintenance (i.e., lawn care, painting, and repairs).

The IRS audited the minister's tax returns for four years, and determined that he was not entitled for any of those years to exclude from taxable income the portion of his housing allowance that he used to pay housing expenses on his second home. The minister appealed to the Tax Court.

Log In For Full Access

Interested in becoming a member? Learn more.

Posted: April 2, 2012
View All
from our store
2020 Church & Clergy Tax Guide

2020 Church & Clergy Tax Guide

Find comprehensive help understanding United States tax laws as they relate to pastors and churches.
12 Law & Tax Guidelines for New Ministers

12 Law & Tax Guidelines for New Ministers

Essential knowledge to ensure legal and financial clarity and integrity in ministry.
20 Finance Questions Churches Ask

20 Finance Questions Churches Ask

Richard Hammar answers relevant tax and finance questions for church leaders.
Essential Guide to Money for Church Boards

Essential Guide to Money for Church Boards

Church board members should have a basic understanding of these financial issues.

ChurchSalary

ChurchSalary

Let ChurchSalary do the work. Get personalized compensation reports for staff and pastors.