This lesson focuses on Part 2 of Loans to Pastors. You can review the Executive Summary to obtain the key points or read the Weekly Lesson for a more thorough presentation of this topic. Start by completing the following interactive quiz to test your knowledge.
A church loans its senior pastor $20,000 to assist with the down payment on a new home. The pastor signs a promissory note agreeing to pay back the loan amount in five annual installments of $4,000, without interest. What are the tax consequences, if any, of this transaction?
Instructions Click on the correct answer for each of the following questions.
Many churches have made loans to a pastor. But few church leaders understand the legal and tax implications associated with such loans. For example, the nonprofit corporation laws of many states prohibit incorporated churches from making loans to ...