                  T.C. Summary Opinion 2002-132



                     UNITED STATES TAX COURT


                BASSAM J. ABDALLAH, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 13619-01S.             Filed October 8, 2002.


     Jonathan P. Decatorsmith and William J. Broderick (specially

recognized), for petitioner.

     William I. Miller and David Weiner, for respondent.



     POWELL, Special Trial Judge:   This case was heard pursuant

to the provisions of section 74631 of the Internal Revenue Code

in effect at the time the petition was filed.   The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority.


     1
        Unless otherwise indicated, subsequent section references
are to the Internal Revenue Code in effect for the year in issue,
and Rule references are to the Tax Court Rules of Practice and
Procedure.
                                - 2 -

     Respondent determined a deficiency of $3,311 in petitioner’s

1998 Federal income tax arising from petitioner’s failure to pay

self-employment tax.   The issue is whether petitioner is exempt

from self-employment tax under section 1402(e).    Petitioner

resided in Hammond, Indiana, at the time the petition was filed.

     Petitioner earned a Master of Divinity degree in December of

1976 from the Lutheran School of Theology in Chicago.    In 1977,

petitioner was ordained into the ministry by the Evangelical

Lutheran Church in America.    Since his ordination, he served as a

minister of the Redeemer Lutheran Church in Bryant, Indiana.

     Based on his religious beliefs and principles, petitioner

conscientiously objects to accepting public insurance.   Thus, in

March of 1977, petitioner obtained a Form 4361, Application for

Exemption from Self-employment Tax for Use by Ministers, Members

of Religious Orders and Christian Science Practitioners, from the

Internal Revenue Service in Muncie, Indiana.   Petitioner

completed and signed the Form 4361 in the presence of witnesses.

     Petitioner mailed the Form 4361 to the Internal Revenue

Service in Cincinnati, Ohio.   Respondent has no record that Form

4361 was filed.   Petitioner does not have a copy of the completed

Form 4361.   The General Instructions on Form 4361, Part G, state:

“Mail your application to the Internal Revenue Service Center for

the place where you live.”    The instructions directed petitioner,
                               - 3 -

a resident of Indiana, to mail Form 4361 to the Internal Revenue

Service Center in Memphis, Tennessee.

     The first 2 years petitioner had net self-employment

earnings of $400 or more for services he provided as a minister

were 1978 and 1979.   Petitioner has not paid self-employment

taxes on his ministerial earnings since he filed the Form 4361 in

1977.   Instead, he has relied on his investments with the Board

of Pensions of the Evangelical Lutheran Church in America to

provide for his retirement.

     Section 1401(a) imposes a tax on the self-employment income

of a taxpayer.   Section 1402(e)(1), however, provides:

          (1) Exemption.–-Subject to paragraph (2), any
     individual who is (A) a duly ordained, commissioned, or
     licensed minister of a church * * * upon filing an
     application (in such form and manner, and with such
     official, as may be prescribed by regulations made under
     this chapter) together with a statement that either he is
     conscientiously opposed to, or because of religious
     principles he is opposed to, the acceptance (with respect to
     services performed by him as such minister, member, or
     practitioner) of any public insurance which makes payments
     in the event of death, disability, old age, or retirement
     * * * and in the case of an individual described in
     subparagraph (A), that he has informed the ordaining,
     commissioning, or licensing body of the church or order that
     he is opposed to such insurance, shall receive an exemption
     from the tax imposed by this chapter with respect to
     services performed by him as such minister, member, or
     practitioner. * * *

     The exemption must be filed no later than “the due date of

the return (including any extension thereof) for the second

taxable year for which he has net earnings from self-employment *

* * of $400 or more”.   Sec. 1402(e)(3)(A).   Section 1.1402(e)-
                                 - 4 -

2A(a)(1), Income Tax Regs., provides:    “Such a request shall be

made by filing an application for exemption on Form 4361”.

     The parties agree that petitioner is a minister who

qualifies for exemption under section 1402(e).     The parties

further agree that, if Form 4361 was filed, the filing was

timely.     The issue is whether petitioner filed a Form 4361 in

1977.

     We found petitioner’s evidence that he had filed for an

exemption to be particularly credible.     His testimony concerning

the filing of the Form 4361 was straightforward and plausible.

Further, his testimony was buttressed by the written statement of

a witness who observed petitioner complete and sign the Form 4361

in 1977.2

     With regards to whether the application was approved by

respondent, as required by the regulations, see section

1.1402(e)-2A(c), Income Tax Regs., we believe that such approval

must have been given.3    Petitioner consistently has not paid

self-employment taxes on his ministerial earnings since 1977.

While we reject any argument concerning estoppel against

respondent, it seems highly peculiar that, if the approval had


     2
        Technically, the statement is hearsay. See Fed. R. Evid.
802. However, respondent has not raised an objection, and the
statement definitely has probative value. See Rule 177.
     3
        While petitioner could not produce a copy of the
application, we note that neither sec. 1402(e), sec. 6001
(pertaining to required records), nor the applicable regulations
require petitioner to retain such a copy.
                                 - 5 -

not been given, petitioner would have filed for 21 years as being

exempt without some dispute.   Rather, it seems more likely that

his file was misplaced at some point in time.       Thus, we find that

petitioner prepared and filed the Form 4361 in 1977.

     Reviewed and adopted as the report of the Small Tax Case

Division.

     To reflect the foregoing,

                                         Decision will be entered

                                 for petitioner.
