Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 68-68

1968-1 C.B. 51

Sec. 107

Sec. 1402

IRS Headnote

The rental value of an apartment furnished to an ordained minister by a charitable organization, not a religious organization for Federal income tax purposes, will not qualify for the exclusion provided by section 107 of the Internal Revenue Code of 1954 where the duties performed by him for that organization are not ordinarily the duties of a minister of the gospel.

Full Text

Rev. Rul. 68-68

Advice has been requested whether, under the circumstances described below, the rental value of an apartment furnished to an ordained minister by a charitable organization qualifies for the exclusion provided by section 107 of the Internal Revenue Code of 1954.

An ordained minister is employed by a charitable organization as its Director of Special Services. He is furnished an apartment by the organization as part of his compensation. The organization is neither a religious organization nor an integral agency of a religious organization.

As Director of Special Services the minister's basic functions are the directorship of the organization's advisory council and the coordination of its cultural programs. In connection with his position, he occasionally performs certain sacerdotal duties including conduct of worship services.

Section 107 of the Code provides, in pertinent part, that in the case of a minister of the gospel, gross income does not include the rental value of a home furnished as part of his compensation.

Section 1.107-1(a) of the Income Tax Regulations provides, in pertinent part, that in order to qualify for the exclusion, the home or rental allowance must be provided as remuneration for services which are ordinarily the duties of a minister of the gospel. In general, the rules provided in section 1.1402(c)-5 of the regulations will be applicable to such determination. Examples of specific services, the performance of which will be considered duties of a minister for purposes of section 107 of the Code, include the performance of sacerdotal functions, the conduct of religious worship, the administration and maintenance of religious organizations and their integral agencies, and the performance of teaching and administrative duties at theological seminaries.

Section 1.1402(c)-5(b)(2)(iii) of the regulations provides that if a minister is performing service in the conduct of religious worship or the ministration of sacerdotal functions, such service is in the exercise of his ministry, whether or not it is performed for a religious organization.

Section 1.1402(c)-5(c)(2) of the regulations provides that if a minister is performing service for an organization which is neither a religious organization, nor operated as an integral agency of a religious organization, and the service is not performed pursuant to an assignment or designation by his ecclesiastical superiors, then only the service performed by him in the conduct of religious worship or the ministration of sacerdotal functions is in the exercise of his ministry.

Since the charitable organization in the instant case is neither a religious organization nor an integral agency thereof, for Federal income tax purposes, the duties described do not qualify as those in the administration or maintenance of a religious organization or an integral agency thereof. Although occasionally the minister performs sacerdotal duties, his overall duties are not basically the `conduct of religious worship' or the `ministration of sacerdotal functions' as contemplated in sections 1.107-1(a) and 1 .1402(c)-5 of the regulations.

Accordingly, the rental value of an apartment furnished to the ordained minister under these circumstances will not qualify for the exclusion provided by section 107 of the Code since the duties performed by him are not ordinarily the duties of a minister of the gospel.