## Facts

- Lionel F. Trebilcock operated a wood-products brokerage as a sole proprietorship (Litco Products) and filed joint returns with his wife for 1969 and 1970.
- Trebilcock paid Reverend James Wardrop $7,020 in each year.
- Wardrop’s primary role was ministerial: he provided spiritual counseling to Trebilcock and Litco’s employees and conducted prayer meetings.
- Wardrop also discussed personal and business matters with employees, but he had no business experience and offered business advice based on prayer.
- Wardrop performed some business-related tasks, including running errands, visiting sawmills, and delivering mail.
- Trebilcock deducted the full payments as “ordinary and necessary” business expenses under I.R.C. § 162(a).
- The Commissioner disallowed the deductions and determined deficiencies; Trebilcock petitioned the Tax Court.

## Issues

1. Whether payments to an ordained minister primarily providing spiritual counseling and religious services to a proprietor and employees are deductible as “ordinary and necessary” business expenses under I.R.C. § 162(a).
2. If not fully deductible, whether and to what extent the payments may be allocated to deductible business services based on incidental business-related tasks performed.

## Decision

- The Tax Court held that only $1,000 per year of the $7,020 payments was deductible under § 162(a).
- The court treated the remaining amounts as nondeductible personal or spiritual expenditures.
- The Commissioner’s deficiencies were sustained except to the extent of the $1,000 annual allowance.
- The Sixth Circuit affirmed the Tax Court’s decision.

## Legal Principles

- I.R.C. § 162(a) permits deductions only for expenses that are ordinary and necessary in carrying on a trade or business; indirect business benefit does not control if the expenditure’s character is personal.
- Payments for services that are primarily spiritual or pastoral are personal in nature and generally nondeductible, even when provided in a workplace setting.
- When a single payment covers both business and personal services, only the portion reasonably attributable to identifiable business-related tasks may be deducted.
- Incidental business services do not convert predominantly personal or religious services into a fully deductible business expense.

## Conclusion

The Tax Court limited the § 162(a) deduction for payments to a minister hired to provide workplace spiritual counseling to the portion attributable to incidental business tasks ($1,000 per year) and disallowed the remainder as personal in character.


Trebilcock v. Comm'r, 64 T.C. 852 (1975)