Page 38 - Virtual Currencies

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Fileid: … tions/p525/2022/a/xml/cycle08/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
You can't make this choice for a non- Inherited property not substantially vested. in the exercise of duties required by the order,
! statutory stock option. If you inherit property not substantially vested at don't include in your income the amounts turned
CAUTION the time of the decedent's death, any income over to the order.
you receive from the property is considered in- If your order directs you to perform services
Dividends received on restricted stock. come in respect of a decedent and is taxed ac- for another agency of the supervising church or
Dividends you receive on restricted stock are cording to the rules for restricted property re- an associated institution, you're considered to
treated as compensation and not as dividend ceived for services. For information about be performing the services as an agent of the
income. Your employer should include these income in respect of a decedent, see Pub. 559. order. Any wages you earn as an agent of an
payments on your Form W-2. If they are also re- order that you turn over to the order aren't inclu-
ported on a Form 1099-DIV, you should list ded in your income.
them on Schedule B (Form 1040), with a state- Special Rules for
ment that you have included them as wages. Certain Employees Example 15. You're a member of a church
Don’t include them in the total dividends re- order and have taken a vow of poverty. You re-
ceived. nounce any claims to your earnings and turn
This part of the publication deals with special over to the order any salaries or wages you
Stock you chose to include in your in- rules for people in certain types of employment: earn. You're a registered nurse, so your order
come. Dividends you receive on restricted members of the clergy, members of religious or- assigns you to work in a hospital that is an as-
stock you chose to include in your income in the ders, people working for foreign employers, sociated institution of the church. However, you
year transferred are treated the same as any military personnel, and volunteers. remain under the general direction and control
other dividends. You should receive a Form of the order. You're considered to be an agent
1099-DIV showing these dividends. Don’t in- of the order and any wages you earn at the hos-
clude the dividends in your wages on your re- Clergy pital that you turn over to your order aren't inclu-
turn. Report them as dividends. ded in your income.
If you’re a member of the clergy, you must in-
Sale of property not substantially vested. clude in your income offerings and fees you re- Services performed outside the order. If
These rules apply to the sale or other disposi- ceive for marriages, baptisms, funerals, you're directed to work outside the order, your
tion of property that you didn't choose to include masses, etc., in addition to your salary. If the of- services aren't an exercise of duties required by
in your income in the year transferred and that fering is made to the religious institution, it isn't the order unless they meet both of the following
isn't substantially vested. taxable to you. requirements.
If you sell or otherwise dispose of the prop- • They're the kind of services that are ordi-
erty in an arm's-length transaction, include in If you’re a member of a religious organiza- narily the duties of members of the order.
your income as compensation for the year of tion and you give your outside earnings to the • They're part of the duties that you must ex-
sale the amount realized minus the amount you organization, you must still include the earnings ercise for, or on behalf of, the religious or-
paid for the property. If you exchange the prop- in your income. However, you may be entitled der as its agent.
erty in an arm's-length transaction for other to a charitable contribution deduction for the
property that isn't substantially vested, treat the amount paid to the organization. See Pub. 526. If you're an employee of a third party, the serv-
new property as if it were substituted for the ex- Also, see Members of Religious Orders, later. ices you perform for the third party won't be
changed property. Pension. A pension or retirement pay for a considered directed or required of you by the
The sale or other disposition of a nonstatu- member of the clergy is usually treated as any order. Amounts you receive for these services
tory stock option to a related person isn't con- other pension or annuity. It must be reported on are included in your income, even if you have
sidered an arm's-length transaction. See Regu- lines 5a and 5b of Form 1040 or 1040-SR. taken a vow of poverty.
lations section 1.83-7 for the definition of a
Example 16. You are a member of a reli-
“related person.” gious order and have taken a vow of poverty.
If you sell the property in a transaction that Housing
isn't at arm's length, include in your income as You renounce all claims to your earnings and
turn over your earnings to the order.
compensation for the year of sale the total of Special rules for housing apply to members of You are a schoolteacher. You were instruc-
any money you received and the FMV of any the clergy. Under these rules, you don't include ted by the superiors of the order to get a job
substantially vested property you received on in your income the rental value of a home (in- with a private tax-exempt school. You became
the sale. In addition, you'll have to report in- cluding utilities) or a designated housing allow- an employee of the school, and, at your re-
come when the original property becomes sub- ance provided to you as part of your pay. How- quest, the school made the salary payments di-
stantially vested, as if you still held it. Report as ever, the exclusion can't be more than the rectly to the order.
compensation its FMV minus the total of the reasonable pay for your service. If you pay for Because you are an employee of the school,
amount you paid for the property and the the utilities, you can exclude any allowance you’re performing services for the school rather
amount included in your income from the earlier designated for utility cost, up to your actual than as an agent of the order. The wages you
sale. cost. The home or allowance must be provided
as compensation for your services as an or- earn working for the school are included in your
Example 14. In 2019, you paid your em- dained, licensed, or commissioned minister. income.
ployer $50 for a share of stock that had an FMV However, you must include the rental value of Example 17. You are a member of a reli-
of $100 and was subject to forfeiture until 2022. the home or the housing allowance as earnings gious order who, as a condition of membership,
In 2021, you sold the stock to your spouse for from self-employment on Schedule SE (Form have taken vows of poverty and obedience. All
$10 in a transaction not at arm's length. You 1040) if you’re subject to the self-employment claims to your earnings are renounced. You re-
had compensation of $10 from this transaction. tax. For more information, see Pub. 517. ceived permission from the order to establish a
In 2022, when the stock had an FMV of $120, it private practice as a psychologist and counsel
became substantially vested. For 2021, you Members of Religious members of religious orders as well as non-
must report additional compensation of $60, fig- Orders members. Although the order reviews your
ured as follows. budget annually, you control not only the details
If you're a member of a religious order who has of your practice but also the means by which
FMV of stock at time of substantial taken a vow of poverty, how you treat earnings your work as a psychologist is accomplished.
vesting . . . . . . . . . . . . . . . . . . . . . . $120 that you renounce and turn over to the order de- Your private practice as a psychologist
Minus: Amount paid for stock . . . . . . . $50 pends on whether your services are performed doesn't make you an agent of the religious or-
Minus: Compensation previously der. The psychological services you provide
included in income from sale to for the order.
spouse . . . . . . . . . . . . . . . . . . . . . . 10 − 60 aren't the type of services that are provided by
Additional income . . . . . . . . . . $60 Services performed for the order. If you're the order. The income you earn as a psycholo-
performing the services as an agent of the order gist is earned in your individual capacity. You
Publication 525 (2022) Page 15