The single largest error I have observed among attorneys, accountants, and their corporate clients (profit and nonprofit) is the assumption that once the corporate seal is obtained, little or no future maintenance is necessary to preserve the corporate integrity. The failure to maintain periodic corporate minutes reflecting corporate activity throughout the year, as well as minutes for the appropriate meetings of the board of directors, can result in serious difficulties for the corporation faced with an inquiry by the IRS or a lawsuit by a creditor.

Corporate Documentation

There are also reporting requirements and various enabling minutes needed with respect to insurance, pensions, salaries, leases, and contracts of employment. In other words, it is important that all necessary corporate activity be documented. How can a pastor stay on top of every aspect of corporate business? One of the best ways is to have an attorney on the board! This is not always possible. So, good record keeping by a competent secretary is important.

Let us assume that you do have an attorney who has helped you in your corporate affairs. (If you don’t have an attorney, you would be well advised to find one. ) Always send him all documents you receive from the:

1. Internal Revenue Service

2. Secretary of State

3. Administrator of any pension plan or trust

4. Government tax agencies-local, state, or federal.

If your board prepares any forms, a copy should be sent to your attorney. There are also a number of other areas for which your attorney should be consulted for legal advice or assistance. The following are of particular importance for his review:

1. Employment contracts

2. Any contract before it is signed

3. Employee workers’ compensation injury

4. Any aspect of indebtedness-bonds, notes, and trusts.

It is imperative that your attorney be informed if there has been any change of address or changes in your board of directors or officers.

Financial Record Keeping

While accurate record keeping certainly includes the recording of minute and corporate resolutions, it also involves detailed financial records. It is not the intent of this book to make an attorney or an accountant out of the pastor or the business manager. It is, however, very

important that all those involved in the business of the corporation understand the importance of doing things in the right way (Then He said to them, `Then render to Caesar the things that are Caesar’s; and to God the things that are God’s,”(Matt. 22:21).

Most people find it a bother to keep their financial records in order. Many tax men believe that the biggest mistake made is failure to keep accurate records of deductions and expenses. Tax record keeping is the highest paying job a minister will ever have. It has been estimated that ministers can save over $60 in taxes for every hour spent in careful record keeping.

Travel Expense

I have talked with a number of pastors who spend a great deal of time on the road. Many of these pastors keep very good records of their travel expenses, but some just aren’t inclined to record their costs. They estimate what they spend and just deduct it on their tax returns. After all, they are “not about to cheat and, if anything, estimate low.” Well, pastor, your testimony as to what you spend traveling to another city is not sufficient to support a deduction of travel expense. By law, your personal claim must be supported by other evidence – your records. Failure to keep adequate records usually will result in a disallowance of your travel expense deduction when there is an examination of your return.

What kind of records should you keep? When you travel, it is wise to keep two types of records. First, you should have a diary or appointment book showing the date, destination, and purpose of the trip. Second, you should keep detailed account of your expenses (i.e. travel, telephone, parking, taxi or car rental, meals, and business entertainment.) When you have these expenses entered in your diary, remember that when your lodging, travel, or entertainment expenses exceed $25, you will need an itemized paid bill or receipt. A canceled check by itself is not acceptable as proof.

Some pastors travel with their wives, and the question is often asked, “Can I deduct the cost of taking my wife?” Sometimes the answer is yes, and sometimes no! The circumstances will dictate the correct answer. If your wife accompanies you because you are lonesome and she has no other responsibilities while traveling with you, you cannot deduct her share of the expenses (so what!-take her anyway). If, however, she is important to the business at hand and is, in fact, important to the meeting, then, yes, her portion is deductible (see the goodwill entertainment test in a tax guide such as the Research Institute of America or the Commerce Clearing House).

Let me stress again that it is not the purpose of this chapter to make tax experts out of pastors, nor is it to detract in any way from the importance of having qualified tax advisers. It is, however, my intent to alert you to some of the areas that are important and to help you see that they are handled correctly.

Auto Expense

No one enjoys keeping a constant record of miles traveled in pursuit of his ministry. It is, however, an absolute necessity. If you are audited and have not kept a mileage log, you will put your auto expense deduction in jeopardy.

There are two methods for computing your auto costs for tax purposes. You would be well advised to compute the cost both ways and choose the method that gives you the greatest deduction. The first method allows you to deduct a given number of cents for each mile driven for the purposes of your ministry. You also may deduct your actual cost for parking, tolls, and related expenses, in addition to the cents-per-mile. A daily log of miles driven should be kept and can be used for substantiation in the event of an audit.

The second method is more detailed in respect to record keeping. You would maintain an itemized list of your actual auto expenses such as gas, oil, lubrication, repairs, parts, insurance, and license. A large part of the expense is depreciation of your auto. In this second method, your record keeping must be detailed, and you must subtract the cost of personal driving and commuting to the office. Developing the habit of keeping records that will allow you to compute your actual auto expenses and of recording your professional miles will allow you to determine which method will give you the greater deduction. One last thought regarding auto expense: If you purchase an automobile for use in the ministry, you will want to discuss it with your tax adviser so that he can compute any investment tax credit that may be utilized.

Professional Expenses

All too often pastors do not keep adequate records of the money they spend for books, magazines, tapes, and newspapers. Books, as well as periodicals and newspapers, that are purchased for professional purposes are deductible in the year of purchase. If, however, you purchase major reference volumes, you will want to depreciate them over the useful me of the books (usually five to seven years). When you were ordained or entered into the professional ministry, you probably had a personal library. That library is now your professional library and may be depreciated at its fair market value established at the time you entered the ministry.

Office Supplies and Expenses

The office area in the home will not be discussed in this chapter. You should discuss this subject with your tax

man. A word of caution: If you are receiving a housing allowance, you will not be entitled to an office-in-the-home deduction. However, you still will be allowed to deduct the expense of office supplies used in your ministry. The same can be said of office equipment, but if the equipment has a useful life of more than one year, it should be depreciated over its me expectancy.

The first thing a pastor should do, if he has not already done so, is to spend time inventorying his library, office equipment, and furnishings. This will accomplish two things. First, such records are necessary in the event of fire or theft. Second, it helps the pastor begin record keeping that might prove valuable in the event of an audit.

Educational Expense

A common expense for ministers is that of continuing education for the development of skills in areas related to the ministry. In this complex world we find that pastors must have knowledge in areas that few would have imagined a few years ago. This book would not have been necessary in the early part of this century. Pastors are now expected to take classes in counseling, business administration, and so forth.

Since pastors are considered to be self-employed, they may deduct the expenses for continuing education on the Schedule C. Many taxpayers itemize such expenses on Schedule A of Form 1040. However, by deducting them on your Schedule C instead, you would lower your Social Security tax base and you would receive a greater benefit from the deduction.

Remember, though, that the education expense deduction must meet certain guidelines (i.e., the education must be incurred for the purpose of maintaining or improving your present job or professional skills). The deduction will not be allowed if the education qualifies you for a new trade or business. You, as a pastor, may not take a course in chemistry and deduct the cost of the course.

If the education does qualify, what may be deducted? Deductible expenses include tuition, books, supplies, fees, and transportation to school. If you must be away from home overnight, you may deduct meals and lodging.

To summarize, taxation is becoming more complex, and you as a pastor were not called to be a tax expert. The best advice I can give you is to keep good records, document everything, and find a competent tax adviser to assist you in your tax preparation. You will appreciate the need for adequate record keeping when the man from the Treasury Department knocks.


We have seen some of the problems pastors face and some of the answers to the problems. We have looked at the “dangerous opportunity” or “crisis, ” and now we must learn from it. I have not tried to answer all the questions regarding the subjects we have discussed in the previous chapters. Rather, my intent has been to raise more questions. Until the clergy and church leaders become aware of the questions they need to ask, they will not solve any of the problems that are beginning to compound themselves.

Each year thousands of young men go into the ministry, For the most part they are ill-equipped to handle the intricacies of corporate structure. Yet, in the last few years we have seen ministries of every type being used of the Lord: music ministries, theatrical ministries, and tape ministries. We know that many cases the first step

toward a newly formed ministry is the formation of a nonprofit corporation. We have viewed the challenge in two ways: without corporate structure; and with corporate structure, and its attendant problem of being a corporation-in-fact, not just in form. Both ways, corporate and non-corporate, present very real problems. In the noncorporate ministry, we found clergymen who could not receive tax-deductible contributions, and thus support for their ministries was hard to come by.

I am sorry to say that men going into the ministry think of a nonprofit corporate structure as simply a vehicle through which people may give on a deductible basis. In fact, however, the corporation is and should be a very viable part of the ministry. Some ministries, after obtaining nonprofit status, do not follow through and file an application for exemption. This can be a major mistake.

We also have examined some of the problems of personal record keeping: tax reporting, Social Security and self-employment tax, housing allowances, and employment contracts.

Other important topics such as putting your own house in order, estate planning, fund raising, deferred giving, and the use of tax law in trusts and annuities, have not even been touched. It would be impossible to include all those topics in the space we have. More importantly, they are areas of such complexity that you should seek specialized legal counsel regarding them.

Again, let me urge you to seek counsel on matters such as these. This is good stewardship. Don’t think you can be all things to the ministry. You cannot be both spiritual leader and businessman. One or both areas are bound to suffer.

Until your organization can put a business manager on staff, please seek competent counsel from professionals. I have indicated that one of the most important people to

your ministry is your accountant. Now let me stress again-your tax expert and your lawyer are parts of the vital team that make your ministry function as it should. Many will say, “We can’t afford it. ” Yet, it seems to me that they cannot afford to be without good counsel.

The church must present a good witness to the world. Like it or not, we must know the law and adhere to it. For too long we have hidden our heads in the sand regarding our responsibilities in Section 501(c)(3) of the Internal Revenue Code. The time has come to be aware of what the law asks of us and what we can expect of it. If we understand and obey it, we might find the law to be on our side. If we do not “render unto Caesar what is Caesar’s,” I feel certain we are going to find the tax-exempt status of the church in crisis. It might be more correct to say that the exempt status of the church is already in crisis. In the Fordham Law Review, an article by Sharon L. Worthing sounds the alert.

IRS has greatly expanded its monitoring of tax exempt organizations in the past decade. A centralized, highly developed system has been created which focuses particularly on organizations exempt under section 501(c)(3), the category which includes churches. Though churches are presently relieved from compulsory participation in the system, this relief has been challenged in Congress twice. The current challenge to such relief is the recent Treasury definition of an integrated auxiliary of a church, which requires church-related organizations to file information returns. Though this requirement might seem to be of minor importance, it represents the formal induction of religious organizations as a class into compulsory IRS monitoring. This, in turn, raises  questions about the constitutionality of having religious organizations under a program of government surveillance. The constitutional difficulty encountered is one of excessive government entanglement with religion. Although the entanglement created by having church-related institutions file informational returns does not seem terribly great, the requirement can be seen as a first step whose ultimate end is full government surveillance of religious institutions. The excessive entanglement test serves as a “warning signal” regarding programs which may appear harmless, but whose ultimate expression would result in a clearly unconstitutional relationship between church and state. Judged in this light, expansion of the information return requirement to include church-related institutions results in an unconstitutional entanglement of government with religion. As you can see, Sharon L. Worthing feels that we already have an unconstitutional situation relating to government entanglement with religion. She is not alone in her thinking. The crisis is becoming more real every day. We must wake up to the reality of it.

In their evangelical enthusiasm, Christian churches sometimes have not given enough priority to learning the requirements of the law. Thus, the church cannot present itself spotless and without blemish. In many cases, we may not agree with the IRS or the government decisions, and we may take issue with the law as it is. Still our responsibility is to adhere to the words of the Apostle Peter:

Submit yourselves for the Lord’s sake to every human institution: whether to a king as the one in authority or to governors as sent by him for the punishment of evildoers and the praise of those who do right. For such is the will of God that by doing right you may silence the ignorance of foolish men (1 Peter 2:13-15).

1. Sharon L. Worthing, “The Internal Revenue Service as a Monitor of Church Institutions: The Excessive Entanglement Problem,” Fordham Law Review 45 (1977), pp. 947-948.


The following list of definitions include commonly used but often misunderstood terms. The burdensome legalese has been replaced with succinct, understandable explanations. It is my hope that this section will be immensely practical and serve as a ready reference guide.

Absolute Gift: A gift of property by will, which carries with it possession of and complete dominion over the property; opposite of conditional gift.

Abstract of Title: A summary of all essential facts relating to the title to a parcel of real property.

Accrual Basis of Accounting: Income is credited when the legal right to the income occurs, and expenses are charged when the legal liability becomes enforceable.

Accrued Interest: Interest that has been earned since the date of the last interest payment.

Accumulated Income : The amount of income from a trust which is retained in the account.

Acknowledgment: A declaration of an act or of a fact to give the act or fact legal validity.

Acquittance: A discharge of an obligor from his obligation. Actuary: A person trained in the highly technical aspects of insurance, particularly in the mathematics of mortality tables and the calculations of premiums, reserves, and other values.

Adjudication: The decision of a competent court regarding matters in dispute.

Adjusted Gross Estate: The value of an estate for estate settlement purposes, after all allowable deductions have reduced the gross estate. Federal estate taxes are based upon the adjusted gross estate.

Administrator: The person appointed by a court to settle an estate, usually when there is no will. lf the person is a woman, she is called an administratrix.

Administrator with the Will Annexed (Administrator C.T.A.): When a will names an executor to administer the estate, and the named executor either does not act or ceases to act before the estate is distributed, and no successor executor is named in the will, someone must be appointed to act. This is the term used when referring to such an appointee.

Administratrix: See administrator.

Adverse Possession: An occupation of land inconsistent with the right of the true owner.

Affiant: A person who makes an affidavit or settlement under oath or affirmation.

Affidavit: A document sworn to and signed before a notary or other court officer, which contains a specific statement.

Agent: A person who acts for another person called a principal by the latter’s authority. The distinguishing characteristics of an agent are threefold: first, that he act on behalf and subject to the control of his principal; second that he does not have title to the property of his principal; and third, that he owes the duty of obedience to his principal’s orders.

Allocation: The crediting of a receipt in its entirety; the disbursing of funds in total to one account.

Amendment: An addition, deletion, or change in a Legal document.

Amortization: The process in which a debt is liquidated by periodic payments to a creditor (i.e., the amount needed in periodic payments which will pay off the debt in a specific number of payments).

Ancillary: Subordinate or auxiliary to something or someone else.

Annual Report: The financial statement issued annually by a corporation to its stockholders.

Annuitant: A person who receives an annuity.

Annuity: A fixed amount (sometimes variable) of money payable periodically. It is paid either for the life of the annuitant or for a definite period of time.

Appraisal: The evaluation of property.

Appreciation: An increase in value of property; opposite of depreciation.

Arbitrage: The buying of stocks, bonds, or other securities in one market and selling in another.

Assets: Everything a corporation owns, including cash, equipment, furnishings, investments, accounts due, materials, and inventories.

Assignee: A person appointed by another or by the court to do some act or enjoy some right, privilege, or property.

Assignment: The legal transfer of right or interests in property to another person.

Assignor: A person who makes a transfer of title or interest in writing.

Attest: To serve as a witness to; as to attest a will or other document.

Attorney in Fact: A person who, acting as an agent, has been given written authorization by another person to transact business for him out of court.

Balance Sheet: A tabular statement of both sides of a set of accounts in which the debit and credit balances add up as equal; a statement of the financial position of a business on a specified date.

Beneficiary: The person named in an insurance policy or will (trust) to receive property and/or money.

Bequeath: To give personal property by will; to be distinguished from devise, dealing with real property. Bequest: A gift of personal property by will.

Bid and Asked: A quotation of the best price which will be paid and the lowest priced offering of a security at a given moment.

Bonafide: In good faith (e.g., a bonafide offer).

Bond: A formal written obligation whereby the maker agrees to pay money either absolutely or upon certain conditions.

Book Value: The stated sum of all of a company’s assets,minus its liabilities, divided by the number of common shares outstanding is the book value per common share.

Buy-Sell Agreement: An agreement where in the owners of a business arrange to transfer their respective ownership interests upon the death of one, or upon some other event, so as to provide continued control of the business or some other desired end.

Capital Gain or Loss: Profit or loss from the sale of an asset, recognized by the tax laws as differing in kind
from profit or loss from the asset’s use.

Capital Stock: The total amount of stock, common and preferred, that a corporation is authorized to issue under its certificate or incorporation or charter.

Cash Basis: An accounting method in which income is not credited for income tax until it is received and expenses are not charged until they have been paid.

Cash Surrender Value: The cash value of a life insurance policy, if redeemed before the death of the insured.

Charitable Bequest: A gift of personal property to a legal charity by will.

Charitable Remainder: An arrangement wherein the remainder interest goes to charity upon the termination or failure of a prior interest.

Charitable Trust: A trust created for the benefit of a legal charity.

Charity: An agency, institution, or organization in existence and operated for the benefit of an indefinite number of persons and conducted for education, religious, scientific, medical, or other beneficient purpose.

Closed Corporation: One whose entire stock is held by one person or by a few persons; not public.

Codicil: The only legal document which can change a will. An amendment or supplement to a will executed with the same formalities as a will.

Collateral: Specific property, commonly securities, given by a borrower to a lender as a pledge for the payment of a loan or other obligation.

Commingled Fund: A common fund in which the monies of several accounts are mixed.

Community Property: Property in which a husband and wife each have an undivided one-half interest by reason of marriage.
Conservator: An individual or trust institution appointed by a court to manage property.

Consideration: Something of value given by one party to another in exchange for the promise or act of such other party.

Contest of a Will: An attempt by legal process to prevent the probate of a will or the distribution of property according to the will.

Conveyance: The transfer of title to real property or the writing effecting the transfer of real property, such as a deed.

Corpus(Body): The principal or capital of an estate, as distinguished from the income.

Curtsy: The life estate of a widower in the real property of his wife.

Custodian: One whose duty it is to hold, safeguard, and account for property committed to his care.

Debenture: A promissory note secured only by the general credit and assets of a company and usually not backed by a mortgage or lien on any specific assets.

Decedent: A deceased person.

Declaration of Trust: An acknowledgment by one holding or taking title to property that he holds in trust for the benefit of someone else, usually made in writing.

Decree: The decision of a court of equity, admiralty, probate, or divorce; as distinguished from judgment of a court of law.

Deed: Written instrument, signed, sealed, and delivered according to the applicable law, containing some transfer, bargain, or contract with respect to property.

Default: The failure to make a payment when due, regarding a bond or promissory note.

Deferred Income: Income deferred until a time in the future when earned income is lower; thus income tax liability is potentially less.

Deficiency Judgment: A judgment for the balance of a debt after the security has been exhausted.

Demand Note: A promissory note payable on demand.

Demise: Death

Depletion: An allowance given to companies in the natural resource industries to compensate for the fact that the resources they are exploiting will eventually be exhausted.

Deposition: A written testimony of a witness under oath, before a qualified officer of the court, to be used in place of his oral testimony at a trial or other hearing.

Depreciation: A decrease in value; opposite of appreciation.

Devise: A gift of real property by will.

Disclaimer: A denial of any interest in or claim to the subject of action (i.e., renunciation of any title or interest).

Dissent: The act of disagreeing.

Divest: To annul or take away a vested right.

Dividend: A payment authorized by a board of directors in cash or in stock; usually a distribution made from current or past profits. A dividend is not a deductible expense to a corporation.

Donee: One who receives a gift.

Donor: One who makes a gift.

Dower: The life estate of a widow in real property of her husband.

Encumbrance: Any right to or interest in real property which lowers its value but does not prevent its transfer, subject to the encumbrance.

Endorsement: A writing, usually the name of the payee, on the deck (the back) of a negotiable instrument, whereby the property represented by the instrument is transferred.

Estate: All property, real and personal, tangible and intan- gible, in which a person has an interest.

Executor: The person named in a will to carry out its terms.

Fiscal Year: A corporation’s accounting year. It need not coincide with the calendar year.

Grantee: Person to whom property is transferred by deed or to whom property rights are granted by means of a trust instrument or some other document.

Grantor: A person who transfers property by deed or grants property rights by means of a trust instrument or some other document.

Guardian: Person appointed to protect the rights (property and person) of a minor.

Holographic Will: A will written by the testator in his own handwriting.

Hypothecation: Generally any pledge to secure an obligation (i.e., hypothecation of securities for a Loan). Indemnity: Protection or exemption from loss or damage.

Interrogatory: A question put in writing.

Inter Vivos Trust: A trust created during the settlor’s lifetime-a living trust.

Intestacy: The condition resulting from a person dying with- out a valid will.

Intestate : Without having left a valid will.

Inurement: Benefiting through the use of.

Irrevocable Trust: A trust which by its terms cannot be revoked by the settler.

Issue: All persons descending from a common ancestor; broader term than children.

Joint Tenants: Persons who own an equal interest in the same property, all of which passes to the survivor.

Judgment: The decision or sentence of a court of law.

Legacy: A gift or personal property by will, the same as a bequest.

Legal Entity: An association created by Law, having a continuous existence independent of the existences of its members and powers and liabilities distinct from those of its members.

Lien : An encumbrance on property.

Liquidation: The process of realizing upon assets and of discharging liabilities in concluding the affairs of a business.

Living Trust: See inter vivos trust.

Margin: The amount paid by a buyer when he uses credit to buy a security.

Notary Public: A public officer who takes acknowledgment of or otherwise attests or certifies deeds and other writings or copies of them; a public officer who takes affidavits and attests signatures of signers.

Nuncupative Will: An oral will by which a person disposes of his property in the event of his death. Some states will not accept nuncupative wills.

Obligee: One to whom an obligation is owed.

Obligor: One who has an obligation to discharge.

Odd Lot: An amount of stock less than the established 100 share unit of trading.

Par Value: The face value of stocks and bonds.

Perpetuity: Duration without limitation as to time.

Personal Property: In the broadest sense, all property other than real property; generally refers to property which is movable.

Portfolio: Total security holdings of an individual or an institution.

Price Earnings Ratio: Current market price of a stock divided by twelve-month earnings per share.

Probate: The judicial procedure to determine that a cer-tain document claimed to be a will of the decedent is, in fact, valid and properly executed; the first step in the settlement of an estate.

Proxy: A person empowered by another to act as his agent in voting shares of stock.

Quitclaim Deed: A legal instrument used to release one person’s right, title or interest to another, without providing a guarantee or warranty of title.

Real Property: Any land or estate in land; may be defined to include anything which is immovable (leaseholds, fixtures, and mortgages or other liens on the land).

Remainder Interest: A future interest which will become an interest in possession after the termination of a prior interest created at the same time and by the same instrument as the future interest.

Remainderman: The person designated in a trust agreement to receive the principal at termination of a trust.

Resolution: A formal document expressing the intentions of a board of directors of a corporation.

Reversion: The interest in an estate remaining with the grantor after a particular interest less than the whole estate has been granted by the owner to another person; as distinguished from remainder interest.

Revocable Trust: A trust which may be terminated by the settlor or by another person.

Revocation of a Will: An act by a person who has drawn a will indicating his intention that the will shall no longer be effective.

SEC: Securities and Exchange Commission.

Settlement: The winding down and distribution of an estate by an executor or an administrator.

Settler: A person who creates a trust (i.e., a living trust operative during a person’s lifetime).

Short Term Trust: An irrevocable trust running for a period of at least ten years. The income is payable to a person other than the settler. Established under the provisions of Revenue Act of 1954.

Spendthrift Clause: Provisions of a will or trust which limit the right of the beneficiary to dispose of his interest, as by assignment, and the right of his creditors to reach it, as by attachment.

Street Name: Stock held in the name of a broker or nominee instead of the legal owner.

Surrogate: The title occasionally given to the judge who presides in the court where estates of deceased persons are administered.

Testamentary Trust: A trust set up by a will; does not become effective until after the death of the will’s maker.

Testate: Having left a valid will.

Testator: A person who has left a valid will at his death. Title: The legal right to ownership of property, real or personal.

Tort: Any wrongful act or omission which causes damage to the person, property, or reputation of another per- son; private wrong as opposed to public wrong (i.e., crime).

Trust: A fiduciary relationship in which one person(trustee) is the holder of a legal title to property (the trust property) subject to an obligation to keep or use the property for the benefit of another person (the beneficiary).

Trustee: The person or corporation who controls or manages a trust for the benefit of specified individuals or organizations.

Trustor: The person who sets up a trust and transfers property to it.

Ultra Vires: Term pertaining to acts of a corporation which exceed its corporate powers.

Vest: To confer an immediate, fixed right to immediate or future possession of property.

Vested Right: To invest or endow a title, function, or power (e.g., the right of a person to own a portion of a contractual pension plan).

Warrant: A paper giving its holder the right to buy a security at a set price, either within a specified period or perpetually. A warrant is generally offered with another security as an added inducement to buy.

Warranty of Title: To guarantee title of an estate or other granted property.

Yield: The return on an investment. To determine the yield on a stock, divide the present indicated annual dividend by the market price of a single share.