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deduction equal to a reasonable allowance for the exhaustion and
wear and tear of property used in a trade or business. In
determing whether living accommodations provided to a corporate
employee constitute property used in a trade or business for
purposes of section 167, this Court has taken into account the
requirements of section 119: (1) The living accommodations are
furnished on the business premises of the employer; (2) they are
furnished for the convenience of the employer; and (3) the
employee is required to accept such living accommodations as a
condition of his employment. The third requirement can be
satisfied by a showing that acceptance of the accommodations was
necessary in order for the employee properly to perform his
duties, as for instance, where he must be available for duty at
all times on the premises of the employer. Johnson v.
Commissioner, T.C. Memo. 1985-175; J. Grant Farms v.
Commissioner, T.C. Memo. 1985-174; sec. 1.119-1(b), Income Tax
Regs. Thus, in the companion cases of Johnson and J. Grant Farms
we held that a corporation in the business of farming was
entitled to deduct depreciation on a residence used by its sole
owner/farm operator because he was required to live on site in
order to be available for duty at all times in connection with
his managerial responsibilities. Petitioner bears the burden of
proving that its deductions are allowable. Rule 142(a).
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