Gift to pastor used for housing equity allowance
Our church recently received a sizeable contribution ($10,000) designated as a pastoral love gift. Our finance committee is unsure how to handle it, particularly because it is a significant amount of money. We understand that the contribution is not tax-deductible to the donor, as it was earmarked as a gift for the pastor, and that the income is taxable to our pastor. My questions are these: 1. Would a gift of this size be considered "inurement to an insider" or an "excess benefit transaction"? 2. In lieu of giving the pastor the money directly, we have considered depositing the funds in the housing equity fund established for him. The fund is in the church's name, and we retain control of it until such time that the pastor retires. Again, if we went this route, could that be considered "inurement"? And if not, if we could legally make this contribution to the housing equity fund, would the contribution be considered taxable for federal or SS purposes? Any help is appreciated. Thanks!