Philip A. Driscoll and Lynne B. Driscoll, a.k.a. Donna L. Driscoll v. Commissioner , 135 T.C. 557 ( 2010 )

PHILIP A. DRISCOLL AND LYNNE B. DRISCOLL, A.K.A. DONNA
L. DRISCOLL, PETITIONERS v. COMMISSIONER OF
INTERNAL REVENUE, RESPONDENT
Docket No. 1070–07. Filed December 14, 2010.
During each of the years at issue, an organization exempt
from tax under sec. 501(a), I.R.C., paid to petitioner husband,
an ordained minister, a so-called parsonage allowance that he
used to provide a principal home and a second home. For each
of their taxable years at issue, petitioners (Ps) excluded from
gross income under sec. 107, I.R.C., the parsonage allowance.
R determined to include in Ps’ gross income for each of those
years the portion of that allowance with respect to a second
home. Held: Ps are entitled to exclude from gross income
under sec. 107, I.R.C., the portion of the parsonage allowance
with respect to a second home.
Paula M. Junghans, for petitioners.
Eric B. Jorgensen, for respondent.
557
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558 135 UNITED STATES TAX COURT REPORTS (557)
OPINION
CHIECHI, Judge: Respondent determined the following defi-
ciencies in, and fraud penalties under section 6663(a) 1 on,
petitioners’ Federal income tax (tax):
Fraud penalty
Year Deficiency under sec. 6663(a)
1996 $64,905 $48,678.75
1997 83,512 62,634.00
1998 107,562 80,671.59
1999 149,880 112,410.00
The only issue remaining for decision is whether peti-
tioners are entitled for each of their taxable years 1996
through 1999 to exclude from gross income under section 107
the amount that an organization exempt from tax under sec-
tion 501(a) paid to petitioner Philip A. Driscoll during each
of those years with respect to a second home that petitioners
owned. We hold that they are.
Background
All of the facts in this case, which the parties submitted
under Rule 122, have been stipulated by the parties and are
so found.
Petitioners resided in Georgia at the time they filed the
petition in this case.
During each of the years 1996 through 1999, petitioner
Philip A. Driscoll (Mr. Driscoll) was an ordained minister
who worked for Mighty Horn Ministries, Inc., later known as
Phil Driscoll Ministries, Inc. (We shall refer to Mighty Horn
Ministries, Inc., later known as Phil Driscoll Ministries, Inc.,
as the Ministries.) During each of those years, the Ministries
was an organization described in section 501(c)(3) and
exempt from tax under section 501(a).
During each of the years 1996 through 1999, petitioners
owned more than one residence or home; they owned a prin-
cipal residence or home in Cleveland, Tennessee (Cleveland
home), and a second residence or home at the Parksville
Lake Summer Home area of the Cherokee National Forest in
1 Unless otherwise indicated, all section references are to the Internal Revenue Code (Code)
in effect for the years at issue. All Rule references are to the Tax Court Rules of Practice and
Procedure.
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(557) DRISCOLL v. COMMISSIONER 559
Lake Ocoee (lake second home), near Cleveland, Tennessee.
Petitioners owned one lake second home from January 1996
through April 1998, which they sold in April 1998, and
another lake second home from April 1998 through 1999. 2
During the years 1996 through 1999, petitioners used their
Cleveland home solely as a residence and their lake second
home solely as a residence. At no time during those years did
petitioners use their Cleveland home or their lake second
home for any commercial purposes, such as rental purposes.
For each of the years at issue, the Ministries filed Form
990, Return of Organization Exempt From Income Tax, in
which it claimed an amount described as ‘‘parsonage allow-
ance’’ (Ministries parsonage allowance). That amount rep-
resented the total amount that the Ministries paid during
each of those years with respect to petitioners’ Cleveland
home and their lake second home for the acquisition and
maintenance of those homes, including mortgage payments,
utilities, furnishings, improvements, and maintenance, such
as lawn care, painting, and repairs.
In the tax return that petitioners filed for each of the years
1996 through 1999, they did not include the Ministries par-
sonage allowance in gross income.
Respondent issued a notice of deficiency (notice) to peti-
tioners for their taxable years 1996 through 1999. In that
notice, respondent determined, inter alia, that petitioners are
not entitled for any of those years to exclude from gross
income under section 107 the portion of the Ministries par-
sonage allowance that the Ministries paid during each of
those years with respect to petitioners’ lake second home. 3
2 Petitioners thus owned two second homes at different times during 1998. That fact is not
material to our resolution of the issue presented. For convenience, we shall refer herein in the
singular to a lake second home or petitioners’ lake second home even when discussing 1998.
3 Respondent did not determine to include in gross income for any of petitioners’ taxable years
1996 through 1999 the portion of the Ministries parsonage allowance that the Ministries paid
during each of those years with respect to petitioners’ Cleveland home. As a result, respondent
did not determine to include the following amounts in petitioners’ gross income for the years
indicated:
Portion of Ministries
parsonage allowance with
Year respect to Cleveland home
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $78,469
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,708
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,704
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,254
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560 135 UNITED STATES TAX COURT REPORTS (557)
As a result, respondent further determined in the notice to
include the following amounts in petitioners’ gross income for
the years indicated:
Portion of Ministries
parsonage allowance with
Year respect to lake second home
1996 .................................................................... $25,842.53
1997 .................................................................... 70,707.50
1998 .................................................................... 116,309.11
1999 .................................................................... 195,778.52
Discussion
Petitioners bear the burden of proving that the determina-
tions in the notice that remain at issue are erroneous. See
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
That the parties submitted this case fully stipulated does not
change that burden or the effect of a failure of proof. See
Rule 122(b); Borchers v. Commissioner, 95 T.C. 82, 91 (1990),
affd. 943 F.2d 22 (8th Cir. 1991).
We must decide an issue of first impression, namely,
whether petitioners are entitled for each of the years at issue
to exclude from gross income under section 107 the portion
of the Ministries parsonage allowance that the Ministries
paid to Mr. Driscoll during each of those years with respect
to a second home of petitioners (i.e., their lake second home).
Section 107 provides:
SEC. 107. RENTAL VALUE OF PARSONAGES.
In the case of a minister of the gospel, gross income does not include—
(1) the rental value of a home furnished to him as part of his com-
pensation; or
(2) the rental allowance paid to him as part of his compensation, to
the extent used by him to rent or provide a home.
In support of their position that they are entitled for each
of the years at issue to exclude from gross income under sec-
tion 107 the portion of the Ministries parsonage allowance
with respect to their lake second home, petitioners argue:
The only limitation expressed by Congress in section 107 was that
amounts excluded from gross income under Section 107 be used to provide
a property used as a dwelling place by the minister. Respondent has stipu-
lated that the properties at issue (i.e., the second homes of petitioners) in
each year in this case were so used, and that the amounts in issue were
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(557) DRISCOLL v. COMMISSIONER 561
expended in connection with the acquisition and maintenance of those
properties. Accordingly, there is no basis under the statute to require Peti-
tioners to include the amounts related to the second homes in their gross
income.
In support of respondent’s position that petitioners are not
entitled for each of the years at issue to exclude from gross
income under section 107 the portion of the Ministries par-
sonage allowance with respect to their lake second home,
respondent argues that section 107
allowed [4] a minister one parsonage allowance for a home. I.R.C. § 107
does not allow a minister a second parsonage allowance for any additional
homes. * * *
An exclusion from gross income first appeared in section
213(b)(11) of the Revenue Act of 1921, ch. 136, 42 Stat. 239,
for the ‘‘rental value of a dwelling house and appurtenances
thereof furnished to a minister of the gospel as part of his
compensation’’. As respondent concedes, the rationale for the
exclusion from gross income in section 213(b)(11) of the Rev-
enue Act of 1921 of the so-called parsonage allowance 5 is
‘‘obscure’’. 6 The identical provision appeared in, inter alia,
section 22(b)(8) of the Revenue Act of 1928, ch. 852, 45 Stat.
798, section 22(b)(6) of the Revenue Act of 1932, ch. 209, 47
Stat. 179, and section 22(b)(6) of the Internal Revenue Code
of 1939, ch. 2, 53 Stat. 10.
Congress reenacted as section 107(1) of the Internal Rev-
enue Code of 1954 (1954 Code) the excludible parsonage
allowance as it appeared in the tax law before Congress
4 Respondent uses the past tense in describing sec. 107 because, effective for taxable years
after the taxable years at issue, Congress amended sec. 107(2) by limiting the rental allowance
excludible under that section to an amount not exceeding the fair rental value of a home of a
minister. Congress appears to have made that amendment in response to the Court’s holding
in Warren v. Commissioner, 114 T.C. 343 (2000). See infra note 16.
5 For convenience, we shall sometimes refer to the allowance that is, or was, excludible from
gross income under sec. 107 and its predecessors as the excludible parsonage allowance.
6 According to respondent,
The Senate Committee Report does not mention the provision [sec. 213(b)(11) of the Revenue
Act of 1921], and the House Conference Report indicates only that the House accepted the Sen-
ate version with an amendment making an unspecified ‘‘clerical change.’’ See S. Rep. No. 275
at 14 (1921); H.R. Conf. Rep. No. 486 at 23 (1921). One commentator has suggested that the
in-kind exclusion grew out of ‘‘the general respect held by Congress and the public for churches,’’
as well as ‘‘Congress’s tendency to benefit favored entities.’’ * * * In 1921, there was no gen-
erally available exclusion for employer-provided housing, and a minister receiving housing from
his current church clearly would not have been eligible for the deduction under Section 214(a)
of the 1921 Revenue Act for traveling expenses, including lodging, ‘‘while away from home in
the pursuit of a trade or business.’’ 42 Stat. at 239.
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562 135 UNITED STATES TAX COURT REPORTS (557)
enacted that Code, except Congress changed the phrase ‘‘a
dwelling house and appurtenances thereof ’’ to the phrase ‘‘a
home’’. Internal Revenue Code of 1954, ch. 736, 68A Stat. 32.
In changing the phrase ‘‘a dwelling house and appurtenances
thereof ’’ to the phrase ‘‘a home’’, Congress did not intend any
change in the law. 7
When Congress enacted the 1954 Code, it also expanded
the excludible parsonage allowance in section 107(2) of that
Code to include the payment of a ‘‘rental allowance paid to
him [the minister] as part of his compensation, to the extent
used by him to rent or provide a home.’’ Id. Congress
expanded the excludible parsonage allowance in section
107(2) of the 1954 Code to remove ‘‘the discrimination in
existing law by providing that the present exclusion is to
apply to rental allowances paid to ministers to the extent
used by them to rent or provide a home.’’ 8 H. Rept. 1337, 83d
Cong., 2d Sess. 15 (1954); S. Rept. 1622, 83d Cong., 2d Sess.
16 (1954).
In expanding the excludible parsonage allowance in section
107(2) of the 1954 Code in order to exclude a rental allow-
ance paid to a minister as part of his compensation, Congress
wanted to ensure that the term ‘‘home’’ did not extend to a
situation where a minister, in addition to a home, rents, pur-
chases, or owns a farm or other business property. To accom-
plish that objective, Congress added at the end of section
107(2) the phrase ‘‘to the extent used by him to rent or pro-
vide a home.’’ 9 That phrase precludes the exclusion from
7 When it enacted sec. 107, Congress stated in pertinent part:
The word ‘‘home’’ as used in both paragraphs [sec. 107(1) and (2)] is not intended to change
the law under section 22(b)(6) of the code [sic] of 1939 which used the term ‘‘dwelling house
and appurtenances thereof.’’
H. Rept. 1337, 83d Cong., 2d Sess. A35 (1954); S. Rept. 1622, 83d Cong., 2d Sess. 186 (1954).
8 Congress described ‘‘the discrimination in existing law’’ as follows:
Under present law, the rental value of a home furnished a minister of the gospel as a part
of his salary is not included in his gross income. This is unfair to those ministers who are not
furnished a parsonage, but who receive larger salaries (which are taxable) to compensate them
for expenses they incur in supplying their own home.
H. Rept. 1337, supra at 15; S. Rept. 1622, supra at 16.
9 Congress explained the phrase ‘‘to the extent used by him to rent or provide a home’’ that
it added at the end of sec. 107(2) as follows:
The term ‘‘home’’ includes the case where furnishings are also included. It does not cover cases
where a minister, in addition to the home, rents a farm or business property, except to the ex-
tent that the total rental paid can be allocated to the home itself and the necessary appur-
tenances thereto, such as a garage.
H. Rept. 1337, supra at A35; S. Rept. 1662, supra at 186.
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(557) DRISCOLL v. COMMISSIONER 563
gross income of any portion of a rental allowance paid to a
minister that is expended in connection with a farm or other
business property. See sec. 1.107–1(c), Income Tax Regs. 10
Respondent acknowledges that petitioners’ second resi-
dence in Lake Ocoee is a home of petitioners, albeit a second
home. 11 Nonetheless, respondent argues that the Ministries
parsonage allowance with respect to that home is not exclud-
ible under section 107. That is because, according to
respondent, section 107, which uses the phrase ‘‘a home’’, and
its legislative history 12 and the regulations under section
107, 13 which also use the phrase ‘‘a home’’, limit a minister’s
10 Sec. 1.107–1(c), Income Tax Regs., provides in pertinent part:
Where the minister rents, purchases, or owns a farm or other business property in addition to
a home, the portion of the rental allowance expended in connection with the farm or business
property shall not be excluded from his gross income.
11 Respondent acknowledges throughout respondent’s briefs that petitioners’ residence in Lake
Ocoee is a home of Mr. Driscoll, albeit a second home, since he had another home or residence,
i.e., his principal home or residence, in Cleveland, Tennessee. For example, respondent asserts
on brief:
petitioners are not entitled to exclude from income on their federal income tax returns as a par-
sonage allowance amounts paid to or on behalf of Driscoll by Ministries for any second homes,
‘‘lake houses’’ on Lake Ocoee, during their taxable years 1996, 1997, 1998, and 1999 under I.R.C.
§ 107.
* * * * * * *
Under I.R.C. § 107, Driscoll, as an ordained minister, is not entitled to exclude from income
as a parsonage allowance amounts paid by Ministries for his second homes, ‘‘lake houses,’’ on
Lake Ocoee, during the petitioners’ taxable years 1996, 1997, 1998, and 1999.
* * * * * * *
* * * petitioners excluded from income as a parsonage allowance amounts paid to or on behalf
of Driscoll for second homes, ‘‘lake houses’’ on Lake Ocoee, by Ministries * * *.
Respondent, as do petitioners, uses the plural ‘‘second homes’’ on brief because petitioners owned
two second homes at different times during 1998, one of the taxable years at issue. See supra
note 2.
12 See H. Rept. 1337, supra; S. Rept. 1622, supra. Respondent’s reliance to support respond-
ent’s position as to the meaning of the phrase ‘‘a home’’ in sec. 107 on the legislative history
of that section, which Congress made law when it enacted the 1954 Code, is puzzling. That is
because (1) respondent concedes that the rationale for the original enactment of the excludible
parsonage allowance in sec. 213(b)(11) of the Revenue Act of 1921 is ‘‘obscure’’ and (2) Congress
did not intend any change in the law when it changed the phrase ‘‘a dwelling house and appur-
tenances thereof ’’ used in the tax law before the 1954 Code to the phrase ‘‘a home’’ used in that
Code, see supra note 7.
13 Sec. 1.107–1, Income Tax Regs., provides in pertinent part:
Rental value of parsonages.—(a) In the case of a minister of the gospel, gross income does not
include (1) the rental value of a home, including utilities, furnished to him as a part of his com-
pensation, or (2) the rental allowance paid to him as part of his compensation to the extent such
allowance is used by him to rent or otherwise provide a home. * * *
(b) For purposes of section 107, the term ‘‘home’’ means a dwelling place (including fur-
nishings) and the appurtenances thereto, such as a garage. The term ‘‘rental allowance’’ means
an amount paid to a minister to rent or otherwise provide a home * * *
(c) A rental allowance must be included in the minister’s gross income in the taxable year
Continued
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564 135 UNITED STATES TAX COURT REPORTS (557)
excludible parsonage allowance to a single home and do not
allow such an allowance for a second home such as peti-
tioners’ lake second home. It is respondent’s view that,
because section 107, its legislative history, and the regula-
tions under section 107 ‘‘refer in the singular to ‘a home,’
rather than ‘homes’ in the plural’’, a minister is entitled to
have an excludible parsonage allowance for only one home. 14
We disagree.
Respondent is substituting in section 107, its legislative
history, and the regulations under section 107 the phrase ‘‘a
single home’’ or the phrase ‘‘one home’’ for the phrase ‘‘a
home’’ that appears in the statute and the other authorities
on which respondent relies. 15 We find nothing in section 107,
in which it is received, to the extent that such allowance is not used by him during such taxable
year to rent or otherwise provide a home. Circumstances under which a rental allowance will
be deemed to have been used to rent or provide a home will include cases in which the allow-
ance is expended (1) for rent of a home, (2) for purchase of a home, and (3) for expenses directly
related to providing a home. Expenses for food and servants are not considered for this purpose
to be directly related to providing a home. Where the minister rents, purchases, or owns a farm
or other business property in addition to a home, the portion of the rental allowance expended
in connection with the farm or business property shall not be excluded from his gross income.
14 On brief, respondent expressly abandons any argument that the phrase ‘‘a home’’ used in
sec. 107 means ‘‘principal residence’’. Respondent states:
Petitioners mistakenly allege that respondent’s position is that ‘‘a home’’ as used in the statute
[sec. 107] means ‘‘principal residence,’’ * * *
Respondent has not defined home as used in I.R.C. § 107 as specifically the home which con-
stitutes a principal residence under other Code sections nor has he ever made such an argu-
ment.
On brief, respondent also expressly abandons any argument that the phrase ‘‘away from
home’’ in sec. 162(a) has any bearing on resolving the issue presented under sec. 107. Respond-
ent states:
Petitioners then quote from Brandl v. Commissioner, 513 F.2d 697, 699 (6th Cir. 1975) ‘‘be-
cause of the almost infinite variety of factual situations involved, the courts have not formulated
a concrete definition of the term ‘home’ capable of universal application.’’ This case [Brandl v.
Commissioner] is inapposite to the facts herein because it involves the meaning of ‘‘tax home’’
under I.R.C. § 162 for purposes of deducting traveling expenses, such as meals and lodging by
salesmen who travel and stay overnight from their ‘‘tax home’’ which can be their principal place
of business in some situations.
15 On brief, respondent also asserts:
Respondent maintains that the legislative history and regulations allow a minister to exclude
from income the payments from a religious organization for the home—the dwelling place—
where the minister lives. In the case of the petitioners, they may own and visit recreational lake
houses or other houses, but their home where they live is 345 Davis Trail NW, Cleveland, TN.
[petitioners’ Cleveland home].
Respondent’s assertion that petitioners ‘‘may own and visit * * * [their second residence in
Lake Ocoee], but their home where they live is’’ their principal residence in Cleveland, Ten-
nessee, flies in the face of not only respondent’s acknowledgment throughout respondent’s briefs
that petitioners’ second residence in Lake Ocoee is their second home, see supra note 11, but
also the parties’ stipulations of fact. Respondent and petitioners stipulated (1) that petitioners
owned a residence in Cleveland, Tennessee, which was petitioners’ principal residence, and a
residence in Lake Ocoee, which was petitioners’ second residence, and (2) that ‘‘Each of these
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(557) DRISCOLL v. COMMISSIONER 565
its legislative history, or the regulations under section
107, which, as respondent points out, all use the phrase ‘‘a
home’’, that allows, let alone requires, respondent, or us, to
rewrite that phrase in section 107. 16 We are not persuaded
by those authorities that Congress intended to allow, let
alone did allow, in section 107 an excludible parsonage allow-
ance only for a single home or one home of a minister. 17
Indeed, section 7701(m)(1) rejects respondent’s position that
the phrase ‘‘a home’’ in section 107 means a ‘‘single home’’ or
‘‘one home’’. Section 7701(m)(1) provides:
SEC. 7701(m). CROSS REFERENCES.—
(1) OTHER DEFINITIONS.—
For other definitions, see the following sections of Title 1 of the
United States Code:
(1) Singular as including plural, section 1.
properties was used solely as a personal residence’’. The term ‘‘residence’’ is defined in Webster’s
Third New International Dictionary (Unabridged) 1931 (2002) to include:
1 a: the act or fact of abiding or dwelling in a place for some time: an act of making one’s home
in a place * * * b: the act or fact of living or regularly staying at or in some place either in
or as a qualification for the discharge of a duty or the enjoyment of a benefit * * * 2 a (1):
the place where one actually lives or has his home as distinguished from his technical domicile
(2): a temporary or permanent dwelling place, abode, or habitation to which one intends to re-
turn as distinguished from a place of temporary sojourn or transient visit (3): a domiciliary place
of abode * * * 4 a: a building used as a home: DWELLING * * *
Thus, respondent and petitioners stipulated that each of petitioners’ residences (i.e., their prin-
cipal residence and their second residence) was a, albeit not the only, ‘‘dwelling place—where
the minister [Mr. Driscoll] live[d].’’
16 In support of respondent’s position as to the meaning of the phrase ‘‘a home’’ in sec. 107,
respondent also relies on the ‘‘rule that exclusions from gross income under I.R.C. § 61(a) are
narrowly construed in favor of taxation.’’ Respondent therefore asserts that ‘‘ ‘a home’ should be
narrowly construed in favor of taxation and treated as singular’’. The rule on which respondent
relies does not necessarily or automatically require holding against a taxpayer who claims an
exclusion from gross income. For example, in Warren v. Commissioner, 114 T.C. 343 (2000), a
Court-reviewed opinion, members of the Court disagreed over the meaning of the phrase ‘‘rental
allowance’’ in sec. 107(2) where the parsonage allowance that was provided to a minister as
most or all of his compensation and that he used to provide a home was more than the ‘‘fair
market rental value’’ of the home. Nonetheless, the Court did not invoke the rule on which re-
spondent relies (i.e., ‘‘exclusions from gross income * * * are narrowly construed in favor of tax-
ation’’) to hold against the taxpayers in Warren. Instead, the Court, with dissents, allowed the
taxpayers to exclude from gross income under sec. 107(2) the parsonage allowance that the min-
ister received and that he used to provide a home, even though that allowance exceeded the
‘‘fair market rental value’’ of the home. The rule on which respondent relies has no more appli-
cation here than it did in Warren. Here, sec. 107 uses the phrase ‘‘a home’’. Respondent wants
to change that phrase to read ‘‘a single home’’ or ‘‘one home’’. The rule on which respondent
relies does not trump the language that Congress used in sec. 107.
17 We have consistently required ‘‘unequivocal’’ evidence of legislative purpose before con-
struing a section of the Code in a manner that would override the plain meaning of the words
used in the section. See, e.g., Warren v. Commissioner, supra at 349; Zinniel v. Commissioner,
89 T.C. 357, 363–364 (1987).
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566 135 UNITED STATES TAX COURT REPORTS (557)
Section 1 of Title 1 of the United States Code in turn pro-
vides:
In determining the meaning of any Act of Congress, unless the context
indicates otherwise—
words importing the singular include and apply to several persons, par-
ties, or things; * * *
As pertinent here, section 107 requires only that amounts
paid as part of a minister’s compensation be used to rent or
provide a home, i.e., a dwelling house of the minister, in
order to be excluded from the minister’s gross income. See
sec. 107(2). In the present case, during each of the years at
issue, the Ministries paid Mr. Driscoll as part of his com-
pensation the Ministries parsonage allowance which he used
to provide for himself a home or a dwelling house in Cleve-
land, Tennessee (i.e., petitioners’ Cleveland home), and a
home or a dwelling house in Lake Ocoee (i.e., petitioners’
lake second home). Those facts satisfy the requirements in
section 107(2) for the exclusion from gross income of the por-
tion of the Ministries parsonage allowance with respect to
petitioners’ lake second home. 18
We hold that the portion of the Ministries parsonage allow-
ance that the Ministries paid to Mr. Driscoll as part of his
compensation during each of the years at issue and that he
used during each of those years to provide for himself a lake
second home satisfies the requirements in section 107(2) that
an allowance be paid to him as part of his compensation and
be used to provide a home. Accordingly, we hold that peti-
tioners are entitled for each of the taxable years at issue to
exclude from gross income under section 107 the Ministries
parsonage allowance with respect to their lake second home.
We have considered all the contentions and arguments of
the parties that are not discussed herein, and we find them
to be without merit, irrelevant, and/or moot. 19
18 Respondent does not dispute that petitioners are entitled to exclude from gross income
under sec. 107 the portion of the Ministries parsonage allowance with respect to their Cleveland
home. See supra note 3.
19 We shall address briefly respondent’s concern that holding for petitioners in the instant case
will ‘‘open the door to an unlimited number of residential properties being treated as parsonages
for one minister.’’ Respondent is speculating about cases that are not before us. We decline to
do so. We have decided on the basis of the facts that the parties stipulated and the respective
arguments that they advance only the issue presented to us in this case.
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(557) DRISCOLL v. COMMISSIONER 567
To reflect the foregoing and petitioners’ concessions in the
stipulation of settled issues,
Decision will be entered under Rule 155.
Reviewed by the Court.
WELLS, THORNTON, HOLMES, and PARIS, JJ., agree with
this majority opinion.
MORRISON, J., concurs in the result only.
MARVEL, J., did not participate in the consideration of this
opinion.
WHERRY, J., concurring: I agree with the majority opinion
but write separately to emphasize the limited factual record
on which this case was decided.
As noted in the majority opinion the word ‘‘home’’ in sec-
tion 107 should, after application of section 7701(m), be read
to mean home or homes. See Kislev Partners, L.P. ex rel.
Bahar v. United States, 84 Fed. Cl. 385, 389 (2008).
For many years courts have interpreted statutory provi-
sions in accordance with their common meaning. ‘‘ ‘The
legislature must be presumed to use words in their known
and ordinary signification.’ * * * ‘The popular or received
import of words furnishes the general rule for the interpreta-
tion of public laws.’ ’’ Old Colony R.R. Co. v. Commissioner,
284 U.S. 552, 560 (1932) (citations omitted). Consequently, I
respectfully reject my dissenting colleagues’ view that ‘‘a
home’’ is ambiguous and that two homes, which they
acknowledge is not impossible, should not be permitted here
because ‘‘ ‘exclusions from income must be narrowly con-
strued.’ ’’ Dissenting op. p. 569.
By design of the parties, this case was submitted for deci-
sion under Rule 122. The result, when combined with the
parties’ briefs, is a very narrow question posited for our deci-
sion. That question is whether section 107(2) covers only one
home or both homes.
That question was effectively resolved when the parties
stipulated that
6. The parsonage allowance paid by the Ministry covered the following
properties:
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568 135 UNITED STATES TAX COURT REPORTS (557)
a. During all of the years at issue, a residence at 345 Davis Trail NW,
Cleveland, Tennessee that constituted the principal residence of Mr. Dris-
coll and his family.
b. A second residence at the Parksville Lake Summer Home area of the
Cherokee National Forest, Lake Oconee, near Cleveland, Tennessee. There
were two properties owned during this period, one from January, 1996
through April, 1998, which was sold in April, 1998, and a second one from
April, 1998, through December 31, 1999; and
8. Each of these properties was used solely as a personal residence and
not for any commercial purposes. None of the properties was rented.
Thus, the majority’s answer here is that it may cover more
than one home. 1
Necessarily absent from our consideration of this case are
important regulatory considerations which were not fully
addressed in the stipulation or on brief. See section 1.107–
1(a), Income Tax Regs., which specifies 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 § 1.1402(c)–5 will be applicable to such deter-
mination.’’ This consideration necessarily involves factual
questions of why the remuneration was provided and
whether it was reasonable compensation and may indirectly
raise issues of private benefit and personal inurement, none
of which were considered here. See Orange Cnty. Agric.
Socy., Inc. v. Commissioner, 893 F.2d 529 (2d Cir. 1990), affg.
T.C. Memo. 1988–380; W. Catholic Church v. Commissioner,
73 T.C. 196 (1979), affd. without published opinion 631 F.2d
736 (7th Cir. 1980); Church of Gospel Ministry, Inc. v. United
States, 640 F. Supp. 96 (D.D.C. 1986), affd. without pub-
lished opinion 830 F.2d 1188 (D.C. Cir. 1987). Thus, my vote
in this case is predicated on its limited facts and the specific
issue raised.
THORNTON and HOLMES, JJ., agree with this concurring
opinion.
1 To persons living in densely populated areas this may seem anomalous. But in the sparsely
populated rural West and Alaska, a minister of the gospel may serve a congregation covering
a geographic area considerably larger than the State of Rhode Island. In such a situation, the
minister may well need more than one home, particularly in mountainous areas with sometimes
severe winter weather.
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(557) DRISCOLL v. COMMISSIONER 569
GUSTAFSON, J., dissenting: I would hold, in favor of the
IRS,that section 107(2) does not exclude from income a par-
sonage allowance for two residences.
I. Exclusions from income must be narrowly construed.
Section 107(2) provides that gross income does not include
a minister’s ‘‘rental allowance * * * to the extent used by
him to rent or provide a home.’’ (Emphasis added.) Mr. Dris-
coll invokes this provision to exclude an allowance that he
used to provide two homes for himself. This interpretation of
section 107(2) is not impossible; but it is, at best, no more
likely than the interpretation that one properly excludes a
rental allowance only to the extent it is used to provide one
home. Therefore, since the most that can be said for Mr.
Driscoll’s position is that section 107(2) is ambiguous, I
believe this case is simply decided by reference to the rule
‘‘ ‘that exclusions from income must be narrowly construed.’ ’’
Commissioner v. Schleier, 515 U.S. 323, 328 (1995) (quoting
United States v. Burke, 504 U.S. 229, 248 (1992) (Souter, J.,
concurring)). If we adopt the narrower construction, then we
must hold against Mr. Driscoll and in favor of the IRS.
II. The IRS’s interpretation of section 107(2) is more likely.
In addition to the mere fact that the indefinite article ‘‘a’’
and the word ‘‘home’’ are both singular, 1 there are two fea-
tures of section 107(2) that indicate it excludes from income
only an allowance for one residence:
A. A person has one ‘‘home’’.
In common usage, a person has one ‘‘home’’, 2 and the word
therefore has a connotation of singularity. The majority evi-
1 The statute’s use of a singular article and noun is not decisive of this question for the reason
that Mr. Driscoll argues and that the majority stresses, majority op. p. 566: ‘‘unless the context
indicates otherwise * * * words importing the singular include and apply to several * * *
things’’. 1 U.S.C. sec. 1 (2006) (‘‘the Dictionary Act’’). However, by its terms this provision ap-
plies only ‘‘unless the context indicates otherwise’’; and section 107(2) is hardly an instance
‘‘Where the intent of Congress seems clear but is frustrated by the use of the singular in the
statutory wording.’’ Fields v. Commissioner, 189 F.2d 950, 952 (2d Cir. 1951), affg. 14 T.C. 1202(1950). Thus, I consider the singular character of the phrase ‘‘a home’’ to be some indication
of the congressional intent.
2 The leading (non-obsolete) definition of ‘‘home’’ in the Oxford English Dictionary (1933) is
‘‘A dwelling-place, house, abode; the fixed residence of a family or household; the seat of domes-
tic life and interests; one’s own house; the dwelling in which one habitually lives, or which one
regards as one’s proper abode’’; and the first definition for ‘‘home’’ in Webster’s Third New Inter-
Continued
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570 135 UNITED STATES TAX COURT REPORTS (557)
dently discounts this connotation because the 1954 Congress
that replaced the prior ‘‘a dwelling house and appurtenances
thereof ’’ with ‘‘a home’’ stated that it intended no substantive
change. 3 That Congress, however, used the word ‘‘home’’ in
its description of then-present law:
Under present law, the rental value of a home furnished a minister of the
gospel as a part of his salary is not included in his gross income.
H. Rept. 1337, 83d Cong., 2d Sess. 15 (1954) (emphasis
added); see also S. Rept. 1622, 83d Cong., 2d Sess. 16 (1954).
Thus, Congress manifestly thought in 1954 that the allow-
ance had always been for a ‘‘home’’, and the connotations of
the word ‘‘home’’ therefore properly inform our under-
standing of what Congress intended when it provided an
exclusion for an allowance used to provide ‘‘a home’’. By
excluding an allowance for a ‘‘home’’, the statute has con-
noted at least since 1954 that an allowance for only one resi-
dence is excluded.
In this vein, the IRS contends (in its reply brief at 3–4
(emphasis added)):
[T]he legislative history and regulations allow a minister to exclude from
income the payments from a religious organization for the home—the
dwelling place—where the minister lives. In the case of the petitioners,
they may own and visit recreational lake houses or other houses, but their
home where they live is [the stipulated principal residence].
I find no concession or contradiction of this contention when
the IRS’s opening brief refers to Mr. Driscoll’s other residence
as a ‘‘second home’’. That phrase—like ‘‘summer home’’,
‘‘vacation home’’, and ‘‘home away from home’’—presumes the
existence of a prior ‘‘home’’ that is one’s habitual dwelling.
The phrase ‘‘second home’’ refers instead to a secondary resi-
dence that is not one’s actual ‘‘home’’.
B. An allowance is excluded only ‘‘to the extent used * * *
to * * * provide a home.’’
However many ‘‘homes’’ or ‘‘second homes’’ a minister may
have, he can use only one of them at a time. If a minister
were to use an allowance to provide a principal residence for
national Dictionary (1966) is ‘‘the house and grounds with their appurtenances habitually occu-
pied by a family : one’s principal place of residence : DOMICILE’’.
3 See majority op. p. 562 & note 7 (citing H. Rept. 1337, 83d Cong., 2d Sess. A35 (1954); S.
Rept. 1622, 83d Cong., 2d Sess. 186 (1954)).
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(557) DRISCOLL v. COMMISSIONER 571
himself and were to use a second allowance to pay for a
second house that he never occupied, the exclusion of section
107(2) would be manifestly inapplicable to the second allow-
ance because it was not ever ‘‘used * * * to * * * provide a
home.’’ That second allowance did not ‘‘provide [him] a home’’
if he did not ever live at the residence for which it paid.
On the other hand, if a minister were to split his year
between two ‘‘homes’’ in both of which he did live (but only
part time), it could be said that the allowances given for each
of those residences did ‘‘provide a home’’ for part of the year.
However, those allowances would be excluded (as the statute
says) only ‘‘to the extent used by him to * * * provide a
home.’’ (Emphasis added.) To the extent that a minister uses
an allowance to pay the rent of the house he is actually
inhabiting, he is using the allowance to ‘‘provide a home.’’
But to the extent he makes his ‘‘home’’ elsewhere and uses
an allowance to pay the rent on an empty house, he is not
using the allowance to ‘‘provide a home.’’
The ‘‘to the extent’’ limitation in section 107 assures that
a minister can exclude an allowance from income only to the
extent he uses it to ‘‘provide a home’’—i.e., a house where he
actually lives. If a minister divides his year between two
homes paid for by two allowances, then a portion of each may
be excluded from income. In this case the record provides no
information on the quantum of Mr. Driscoll’s use of the two
residences. The IRS did not disallow any of the exclusion of
the allowance for Mr. Driscoll’s principal residence, and Mr.
Driscoll did not argue for any allocation that might have
been more favorable. Mr. Driscoll therefore used the full
extent of the section 107 allowance on his principal resi-
dence.
III. Exclusion of multiple parsonage allowances would serve
no evident legislative purpose.
The majority states that the original congressional
rationale for the parsonage exclusion in 1921 is ‘‘obscure’’.
Majority op. p. 561. This is hardly a warrant for interpreting
the provision broadly to exclude multiple allowances for
houses unoccupied for some or all of the year. It is impossible
to substantiate, and difficult even to imagine, a congressional
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572 135 UNITED STATES TAX COURT REPORTS (557)
motive to extend the exclusion of section 107 to a second resi-
dence, or a third, or a fourth.
The majority asserts that it approves today only the exclu-
sion of an allowance on a second residence; and the majority
brushes aside, as ‘‘speculat[ion] about cases that are not
before us’’, the IRS’s expressed concern about ‘‘ ‘an unlimited
number of residential properties being treated as parsonages
for one minister.’ ’’ Majority op. note 19. However, there is
nothing in Mr. Driscoll’s argument or the majority’s rea-
soning that would support any distinction between a ‘‘second
home’’ and a ‘‘third home’’. The majority decides today that,
if a property is a dwelling house, then it is a ‘‘home’’ for
which an allowance is excludable, no matter the number of
‘‘homes’’ a minister may claim.
It is true that there are scenarios in which a minister may
work in (and therefore reside in) several ministry locations.
For example, a minister may be an itinerant evangelist;
another minister in a sparsely populated area may serve
multiple congregations that are distant from each other; and
another minister may have seasonal duties in different loca-
tions. A narrow interpretation of section 107 might work to
their disadvantage. However, in addition to the parsonage
allowance under section 107, the Code also includes section
119 (which excludes lodging on the employer’s premises for
the employer’s convenience) 4 and section 162(a)(2) (which
allows a deduction for traveling expenses ‘‘while away from
home’’). 5 Taken together, sections 119, 162(a)(2), and 107
(construed to exclude only a single parsonage allowance)
would address many of these multiple-ministry scenarios. If
there is an argument to be made that these Code provisions
make inadequate provision for some of these scenarios, it is
an argument that was not made here and thus is not before
us. The record includes no suggestion of ministry undertaken
4 If a minister who maintains his section 107 home in one location is required to be away from
home, the value of his stay in a rectory or ‘‘prophet’s chamber’’ on church premises may be ex-
cludable under section 119.
5 The minister who is required to be temporarily away from home and to pay for a hotel or
other temporary housing may be entitled to deduct that expense under section 162(a)(2). He is
temporarily away from his home; but it remains his ‘‘home’’; and the rent he pays on that home
is spent to ‘‘provide a home’’ from which he is only temporarily absent. However, if a minister
changes his location and then inhabits a dwelling that now becomes truly his ‘‘home’’ for pur-
poses of section 107, then in that new location he is not ‘‘away from home’’ for purposes of sec-
tion 162(a)(2). He can exclude under section 107 any allowance for the expense of the new home,
and he cannot deduct that expense under section 162.
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(557) DRISCOLL v. COMMISSIONER 573
at two locations; and instead the parties stipulated that Mr.
Driscoll’s principal residence was in Cleveland, Tennessee,
and that his second home was ‘‘near Cleveland, Ten-
nessee’’.
The chance that Congress in 1954 thought it was permit-
ting the exclusion of multiple parsonage allowances seems
remote. There is therefore no reason not to apply the general
rule that exclusions are construed narrowly. I would apply
that general rule here and hold that section 107(2) excludes
only an allowance used to provide the single home where the
minister actually resides.
COLVIN, HALPERN, GALE, GOEKE, and KROUPA, JJ., agree
with this dissent.
f
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