CCA 200952041: A housing allowance designation must precede payment

Plain-English summary

Chief Counsel Advice addresses the timing and amount of a university's designation of a housing allowance. The advice states that the designation must be made before payment, and that the date of a later letter does not establish advance designation. The taxpayer could argue that the letter memorialized an earlier official action, but had not yet produced such a letter for the years at issue. The advice also states that the allowance must be limited to the rental value of the home.

Ruling snapshot

• Question: Did a letter establish that a university designated a housing allowance before making the payment?
• Outcome: Advice given
• Key authorities: IRC § 107

Full text (IRS public release)

ID: CCA_2009102913585741 Number: 200952041
Release Date: 12/24/2009
Office: -----------------------------
UILC: 107.01-00

From: ---------------
Sent: Thursday, October 29, 2009 1:58:58 PM
To: ---------------------
Cc: -----------------------
Subject: 107 designation

The designation must be in advance of the payment, so the date of this letter does not demonstrate that the university made the designation in advance of the payment as required. However, the taxpayer could argue that the letter memorialized an official action taken earlier, i.e. in advance of the payment. Of course, the TP has yet to show any such letter for the years at issue. We also note that the allowance must be limited to the rental value of the home. -----------------------------------------------------------------

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