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years at issue, they are entitled to exclude 50 percent of that
value as a so-called working condition fringe under section
132(a)(3). That is because, according to petitioners, 50 percent
of Mr. Whitehead’s use of certain Burien Nissan automobiles
during those years constituted a business use of those automo-
biles.
For purposes of section 132, the term “working condition
fringe” means any property or services provided to an employee to
the extent that, if the employee paid for such property or
services, such payment would be allowable as a deduction under
section 162 or section 167. Sec. 132(d). Section 162 generally
allows a deduction for ordinary and necessary expenses paid or
incurred during the taxable year in carrying on a trade or
business. Sec. 162(a). Section 167 allows a deduction for a
reasonable allowance for the exhaustion, wear and tear, and
obsolescence of property used in a trade or business or held for
the production of income. Sec. 167(a). A particular payment
otherwise allowable as a deduction under section 162 or section
167 is not allowable unless any applicable substantiation re-
quirements of section 274 are satisfied. Sec. 1.132-5(a)(1)(ii),
Income Tax Regs.
In the case of a taxpayer’s use of an employer-provided
vehicle, in order to exclude from gross income as a working
condition fringe under section 132(a)(3) any portion of the fair
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