                                           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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