• The Tax Court ruled that a monthly food and clothing allowance paid by a church to its minister constituted taxable income. The church paid the minister $300 each month for food and clothing expenses. The Tax Court concluded that these amounts represented taxable income, and further that they were not deductible. The Court observed that the tax law “provides a comprehensive definition of gross income” and that this term “includes income realized in any form, whether in money, property, or services.” Accordingly, “income may be realized in the form of meals and clothing as well as in cash.” In concluding that no part of the monthly food allowances were tax-deductible, the Court observed:
Having concluded that petitioner had gross income of $3,600 from his monthly allowance, we now consider whether he is entitled to any deductions in regards thereto. Section 162 provides that there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business. Performance of services as an employee constitutes a trade or business; however, employee expenses must be ordinary and necessary to the performance of the employee’s duties to be deductible. Expenses for meals are traditionally nondeductible personal expenses. Since food is consumed regardless of one’s employment status or ministerial duties, the meal expenses do not qualify under section 162(a) as ordinary and necessary.
In rejecting any deduction for the cost of the taxpayer’s clothing, the court noted that “the cost of acquisition and maintenance of uniforms is deductible generally if (1) the clothing is of a type specifically required as a condition of employment, (2) it is not adaptable to general usage as ordinary clothing, and (3) it is not so worn. There is no indication in this record that the amount of the clothing allowance is for uniforms or special clothing.” Kalms v. Commissioner, T.C. Memo 1992-394.
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