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petitioner prevails.3 Accordingly, we first address the parties’
arguments that focus on section 274(e)(2); i.e., whether it acts
as an exception or a limitation.
The section 274(e)(2) question is whether Congress intended
the words “to the extent that” to except taxpayers from section
274(a) or whether it limits a taxpayer’s deduction to the amount
of income includable by the employee. Generally, for purposes of
imputed employee fringe benefit income, the value of a benefit
received from use of corporate property is the fair rental value
of such property less any reimbursement. See Ireland v. United
States, 621 F.2d 731, 737-739 (5th Cir. 1980); Loftin & Woodard,
Inc. v. United States, 577 F.2d 1206, 1219 (5th Cir. 1978); Dole
v. Commissioner, 43 T.C. 697, 707 (1965), affd. 351 F.2d 308 (1st
Cir. 1965); Levy v. Commissioner, T.C. Memo. 1984-306. Congress,
however, has provided specific valuation rates for certain
benefits, including employer-provided flights on noncommercial
3 Because of our holding on the sec. 274(e) issue, we need
not and do not decide whether the aircraft in this case is a
“facility” used in connection with “an activity which is of a
type generally considered to constitute entertainment, amusement,
or recreation”. Sec. 274(a)(1)(A) and (B). It would also
include deciding whether an aircraft, or the aircraft in this
case, is a transportation facility and/or which type of facility
it may primarily be. The answer to that question would be
transitory in nature because the use could change on a year-by-
year basis. Because of our holding on the sec. 274(e) issue, the
outcome in this case would be the same irrespective of our
holding on the broader question of whether sec. 274 applies. In
addition, our holding in the context of sec. 274(e) provides a
universal answer to the controversy between the parties here.
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