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II. Corporate Automobile
Respondent determined that the prorated annual lease value
of the corporate automobile furnished to Deborah during 1994 and
1995 constituted additional gross income to Deborah in each of
those years. Deborah concedes that the automobile’s prorated
annual lease value constituted income to the extent that she used
the automobile for personal reasons and did not pay for such
personal use. Deborah contends, however, that the automobile’s
prorated annual lease value did not constitute income to the
extent the automobile was used for business purposes and to the
extent she compensated Cox Tomato for her personal use of the
automobile. Deborah, however, has cited no provision of the
Internal Revenue Code in support of her argument.
Section 61(a)(1) provides that gross income includes fringe
benefits such as employer-provided automobiles. Sec. 1.61-
21(a)(1), Income Tax Regs. Absent a statutory exclusion, section
61(a)(1) requires that Deborah’s gross income include the full
annual lease value of the automobile, prorated for the portion of
the calendar year in which the automobile was available to
Deborah. Sec. 1.61-21(d)(1)(i), Income Tax Regs. The parties
agree that the prorated annual lease value of the automobile is
$6,458 for 1994 and $7,750 for 1995. Sec. 1.61-21(d)(2),
(4)(i)(A) and (B), and (5)(i), Income Tax Regs.
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