Jump directly to the content

Clergy Compensation

Tax court decides compensation was reasonable

Truth Tabernacle, Inc. v. Commissioner of Internal Revenue, T.C. Memo. 1989-451

The United States Tax Court addressed the issue of "unreasonable compensation" paid to clergy.

This issue is important for two reasons. First, section 501(c)(3) of the Internal Revenue Code specifies that churches are not eligible for tax-exempt status if they pay unreasonable compensation to any worker. Second, the law does not define "unreasonable compensation," and this makes court rulings interpreting the phrase very significant.

Let's look at the facts of the case. Truth Tabernacle was incorporated as an independent church in 1978. The church was a fundamentalist Christian congregation, and its doctrine included a belief in "the death, burial, and resurrection of the Lord Jesus Christ … the sovereignty of the Church of God … Jesus Christ as the head of the church … ...

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
  • March 1, 1990

Related ResourcesVisit 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.
20 Finance Questions Churches Ask
20 Finance Questions Churches Ask
Richard Hammar answers relevant tax and finance questions for church leaders.
Protecting Your Tax-Exempt Status
Protecting Your Tax-Exempt Status
Understand the requirements of your tax-exempt status.