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?
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: