Rabbi Lawrence has served his large synagogues congregation on a full-time basis for 30 years, performing all the functions of the Rabbi in accordance with the religious tenets and practices of the Jewish faith. For these services, Rabbi Lawrence was paid an annual salary of 100,000. In addition, the synagogue provided him with a monthly rental allowance of $4,000 which covered rental and utilities expenses of the home he and his wife lived in. Before he retired, in recognition of his years of past service, the synagogue, through official action of its governing body, authorized the payment of the same rental support upon retirement, to be paid for so long as he lived with survivor benefits for his wife.

What is the tax treatment to Rabbi Lawrence and his wife for the following:

a. The $4,000 monthly rental allowance while serving as Rabbi?

b. The $4,000 monthly rental upon retirement while he is alive?

c. The $4,000 monthly rental to the Rabbis wife should the Rabbi predecease her?

Use as your authority the applicable Code and Regulation sections as well as the following Revenue Rulings:

• Rev. Rul. 63-156, 1963-2 CB 79
• Rev. Rul. 72-249, 1972-1 CB 36
• Rev. Rul. 78-301, 1978-2 CB 103