Our pastor retired and the name of the church he founded was also retired. The year prior to his retirement, the budget committee designated a lump sum retirement gift to appreciate his 30 years of sacrifice for God and His church. Is this appreciation gift from the church taxable? That is, should it be included in his box of the W2? Reading various materials from the IRS, the main issue seems to revolve around the nature of the gift. Must we "prove" that the money was an "appreciation gift" and not compensative for services rendered?