Tax Research

FACTS:  A cantor of the Jewish faith was employed by a congregation on a full-time basis.  He was not ordained but had a bona fide commission and performed substantially al of the temple’s religious functions.  He receives a rental allowance as part of his compensation package.

QUESTION:  Is the cantor allowed an exclusion from income for that portion of his compensation designated as a rental allowance even though he is not an ordained minister?

RELEVANT LAW:  § 107 of the Internal Revenue Code allows a minister of the gospel to exclude from gross income wither the rental value of a home furnished to him as part of his compensation or the rental allowance paid as part of his compensations to the extent it is used by him to rent or provide a home.

Rev. Rul. 78-301, 1978-2 CB 103 reversed a prior Revenue Ruling that held that a cantor at a Jewish Community Center was not entitled to exclude a portion of this income under §107 because he was not an ordained minister.  Under the 1978 Revenue Ruling, the IRS allows commissioned or licensed ministers to be treated in the same manner as ordained ministers of the gospel if the perform substantially all the religious functions within the scope of the tenets and practices of their religious denominations.

CONCLUSION:  Since the cantor has a bona fide commission and performs substantially all of the temple’s religious functions, he should be entitled to exclude from gross income that portion of his compensation designated as a rental allowance as long as the allowance is used to rent or otherwise provide a home.

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