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meet the substantiation requirements under section 274(d) and the
regulations thereunder by introducing either adequate records or
sufficient evidence corroborating Mr. Whitehead’s own statements
with respect to his business use of certain Burien Nissan automo-
biles during the years at issue.
On the record before us, we find that petitioners have
failed to establish that any portion of Mr. Whitehead’s use of
certain Burien Nissan automobiles during the years at issue
constituted a business use, the fair market value of which is
excludable from gross income as a working condition fringe under
section 132(a)(3). We further find on that record that the
entire fair market value of Mr. Whitehead’s use of certain Burien
Nissan automobiles during the years at issue is includible in
petitioners’ income for those years as wages to Mr. Whitehead.
Having so found, we turn now to the parties’ dispute over
the fair market value of Mr. Whitehead’s use of certain Burien
Nissan automobiles during the years at issue. With respect to
employer-provided automobiles, unless the taxpayer applies one of
the special valuation rules set forth in section 1.61-21(d), (e),
and (f), Income Tax Regs.,35 the fair market value of an
35On brief, petitioners claim that they applied one of the
special valuation rules, namely, the automobile lease valuation
rule under sec. 1.61-21(d), Income Tax Regs., to calculate the
value of petitioners’ respective uses of certain Burien Nissan
automobiles during the years at issue. We are not convinced from
the calculation that petitioners present on brief that they did
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