Weber v. Comm'r of Internal Revenue

• Court: U.S. Tax Court
• Writing for the Court: DAWSON
• Citation: Weber v. Comm'r of Internal Revenue, 103 T.C. 378, 103 T.C. No. 19 (T.C. 1994)
• Decision Date: 25 August 1994
• Docket Number: No. 14475–91.,14475–91.
• Parties: Michael D. and Barbara L. WEBER, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

103 T.C. 378

103 T.C. No. 19

Michael D. and Barbara L. WEBER, Petitioners,

v.COMMISSIONER OF INTERNAL REVENUE, Respondent.

No. 14475–91.

United States Tax Court.

Aug. 25, 1994.

Randolph L. Worth and William Joseph Austin, Jr., for petitioners.

James E. Gray and Marianna Dyson, for respondent.

DAWSON, Judge.

This case was assigned to Special Trial Judge John J. Pajak pursuant to the provisions of section 7443A(b)(3) and Rules 180, 181, and 182. All section references are to the Internal Revenue Code in effect for the year in issue. All Rule references are to the Tax Court Rules of Practice and Procedure. The Court agrees with and adopts the Special Trial Judge's opinion, which is set forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

PAJAK, Special Trial Judge:

Respondent determined a deficiency in petitioners' 1988 Federal income tax in the amount of $772.

After a concession the Court must decide whether petitioner Michael D. Weber (petitioner), a United Methodist Minister, was an employee or self-employed in 1988. The answer will determine whether his expenses constitute deductible business expenses on Schedule C under section 62(a)(1) or are miscellaneous itemized deductions allowed on Schedule A to the extent that they exceed 2 percent of petitioners' adjusted gross income under section 67.

This is the test case for the United Methodist Ministers as to these issues. Petitioners in many of the pending cases have agreed to be bound by the final decision in this case.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found. Petitioners' legal residence was Route 1, Box 208–B, Kittrell, North Carolina, at the time they filed their petition.

Petitioner has been an ordained minister of the United Methodist Church since 1978. The United Methodist Church operates in accordance with the Book of Discipline of the United Methodist Church (1984 ed.) (Discipline). The Discipline sets forth the church laws, plan, polity, and process by which United Methodists are guided. The Discipline also serves as a practical manual that sets forth and explains the standard organization of the conferences, jurisdictions, and mission fields of the United Methodist Church. Every United Methodist Minister must agree to abide by and practice those precepts. Petitioner agreed to follow the Discipline.

The Discipline lists the specific duties that a minister is expected to perform. A minister must preach, read, and teach; prior to a baptism, a minister must instruct the parents and sponsors; a minister must encourage the distribution and use of Methodist literature in the local church; a minister must visit the sick, the aged, and others in need; a minister must perform marriage ceremonies in accordance with the laws of the State and the United Methodist Church; a minister must counsel those experiencing matrimonial difficulties; a minister must console bereaved families and conduct appropriate funeral and memorial services; a minister must lead a congregation to accept the racial and ethnic inclusiveness of the United Methodist Church.

The Discipline states that a “local pastor shall be under the supervision of a district superintendent and a counseling elder who shall supervise the local pastor's work in the ministerial course of study and give counsel on matters of pastoral responsibility.” Discipline, supra par. 406.4. The Discipline provides that “local pastors shall be amenable to the Annual Conference in the performance of their pastoral duties and shall attend the sessions of the Annual Conference.” Discipline, supra par. 406.5. The Discipline provides for a mandatory retirement age of 70 for ministers, provides for involuntary retirements, and requires that ministers formally request a leave of absence. The Discipline shows that the United Methodist Church is well organized to accomplish its goals.

The structure of the United Methodist Church consists of a series of “conferences” that have progressively decreasing jurisdictional authority. The conferences include, among others, the General Conference, the Jurisdictional Conferences, and the Annual Conferences.

The General Conference is the highest conference of the United Methodist Church. It is a collegial body of ministerial and lay delegates elected from each of the Annual Conferences presided over by Methodist bishops. The General Conference meets every 4 years to discuss and resolve issues of concern to the United Methodists. The General Conference has the authority to amend certain portions of the Discipline. The General Conference also has full legislative power and authority to define the power and duties of the Annual Conference, other conferences at a more local level, and the congregational meetings.

The United States is divided into five Jurisdictional Conferences. One of the primary responsibilities of these conferences is to elect the bishops.

The Annual Conferences are composed of ministerial and lay members. A bishop presides over each Annual Conference. The Annual Conferences are the basic ruling bodies of the United Methodist Church, the basic jural units, the primary organizations, and the legal units in the life of the church. The Discipline recommends that each Annual Conference be incorporated, whenever practicable. The record does not indicate whether in 1988 the North Carolina Annual Conference was incorporated.

A minister is accountable to an Annual Conference. Each Annual Conference has the authority to decide all matters that relate to the character and conference relations of the ministers within its jurisdiction. An Annual Conference can impose requirements on ministers in addition to those of the Discipline. The clergy members of the executive session of an Annual Conference have the authority to discipline and fire a minister.

The Annual Conference has the power to hear complaints against its clergy members, and may try, reprove, suspend, deprive of ministerial office and credentials, and expel or acquit any against whom charges have been proffered. The Annual Conference has the power to administratively locate a ministerial member for unacceptability or inefficiency, subject to rights of appeal. (Administrative location means that a minister can no longer be permitted to itinerate. The minister may also lose salary and benefits.) The Annual Conference credentials ministers and requires continuing education for the ministers. The Annual Conference limits the amount of time a minister may take for vacation to 1 month each year.

The portion of the Discipline on the Annual Conferences demonstrates that the Annual Conferences have significant control over ministers.

The United Methodist Church uses an itinerant system for assignment of the ministers within the church. The itinerant system is defined as:

the accepted method of The United Methodist Church by which ordained ministers are appointed by the bishop to fields of labor. All ordained ministers shall accept and abide by these appointments. * * * 1. Full-time service shall be the norm for ministry in the Annual Conference. Full-time service shall mean that the person's entire vocational time is devoted to the work of ministry in the field of labor to which one is appointed by the bishop.

Discipline, supra par. 436.2.

Ministers of the United Methodist Church are assigned by the bishops to the local churches. A bishop may seek the advice of the cabinet, a group of district superintendents appointed by the bishop, about whether a particular minister should be appointed to a particular local church. A bishop has the ultimate authority to require a minister to serve at a particular local church. A minister ultimately cannot refuse to accept an appointment. One example was given of a pastor who refused an appointment and was told that unless he voluntarily took a leave of absence, he would be put on involuntary leave.

If a minister does not perform appropriately, the bishop has the authority to ensure that the minister is properly supervised and counseled as to his behavior. A minister must have the approval of a bishop to transfer into an Annual Conference.

District superintendents oversee the ministers and the local churches. The Discipline specifies that the supervision responsibilities of the district superintendent are as follows:

Supervision.—1. To work with pastors, Pastor–Parish Relations Committees * * * in formulating statements of purpose for congregations in fulfilling their mission, in clarifying the pastors' priorities in accomplishing these purposes, and being available to them for counsel.

2. To establish a clearly understood process of supervision for clergy of the district, including observation of all aspects of ministry, direct evaluation, and feedback to the clergy involved.

Discipline, supra par. 520.

Ministers are well-educated, trained professionals who ordinarily do not require day-to-day supervision. A minister must meet periodically with the appropriate district superintendent to discuss the minister's ministry and local church. Ministers are required to submit periodic reports to the district superintendents. Ministers must report financial difficulties of the local church to the district superintendent. Ministers are evaluated annually by the district superintendents and the Pastor–Parish Relations Committees of the local churches. The Pastor–Parish Relations Committees deal with problems that the members of the congregation may have with the minister and any problems the minister may encounter.

Every minister who is a member of an Annual Conference has the right to a ministerial appointment and to be paid an equitable salary. Each Annual Conference has an Equitable Salary Commission that determines the minimum salaries of the ministers and provides a supplement to any local churches which cannot meet the minimum salary level. If a local church opening is not available, the Annual Conference provides for the payment of a minister's salary. The...