Trips to the Holy Land?
Is our church's gift to our pastor taxable?

Question:
In 2008, our pastor received his doctorate degree from seminary. The church presented him with a gift to the Holy Land. Does he need to claim this as income for 2008?

Answer:
How blessed your pastor must have felt by your church's generosity. Many churches, like yours, have presented their minister with an all-expense paid trip to the Holy Land for the minister, and sometimes their spouses too. Often such trips are provided to commemorate a special occasion, such as a birthday or anniversary. In many cases the value of such a trip is treated as a nontaxable gift to the minister. Unfortunately, if either or both of the following statements are true, this is the wrong way to handle this kind of gift. If:

  • The trip is provided to honor the minister for his or her faithful services on behalf of the church, or
  • The trip is provided to enhance or enrich the minister's ministry. While a trip to the Holy Land can benefit one's ministry, such a trip is not a business expense under current law. The tax code provides that "no deduction shall be allowed … for expenses for travel as a form of education." IRC 274(m)(2). A committee report explaining this rule contains the following observations:

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Posted:
February 20, 2009
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