Cleophas and Rose Cox, taxpayers, petition from a judgment of the district court *175 denying their claim for a tax refund. We find that the district court correctly held that the taxpayers could not exclude certain rental payments from their gross income, and accordingly we affirm the judgment below.

I. FACTS

Mr. Cox was an employee of the Federal Aviation Administration (“FAA”) during the relevant tax year. He was assigned to the Guam region and he and his family lived in FAA housing there. Cox was the FAA Resident Director for Guam, and his responsibilities included air traffic control and crash investigations, as well as overseeing day-to-day housing matters. He received a standard FAA salary for such a position, and from that salary the Government deducted a portion for rental of Cox’s FAA quarters. Thus Cox never physically handed over his rent payments to the FAA and his take-home pay did not include the amount allocated to rent.

Cox’s home is eight-tenths of a mile from his office. Both the home and office are within the FAA complex. Cox testified that he would not be able to manage the FAA complex “long distance” and that his job required his physical presence in the complex at all hours. He received long distance business phone calls at night and on weekends because of date and time differences; other FAA employee-residents would come to Mr. Cox with housing complaints, although there was a housing director who had primary responsibility for housing matters. Cox’s superior testified that Cox was required to live in the FAA complex.

The district court found, inter alia, that the evidence was insufficient to show that Cox was required to live in the FAA complex as a condition of employment. The district court noted that answering phone calls and handling housing complaints were a minor part of Cox’s overall responsibilities.

There is no evidence in the record that non-government housing was not available, or that Cox’s salary would be reduced if he did not live in the FAA complex. Cox told a government auditor that he would not be fired if he chose to live elsewhere.

II. ISSUES

Cox’s unique living and working arrangement gives rise to the question here. Cox claims that under 26 U.S.C. § 119 , he is entitled to exclude the amount of his salary allocated to rent from his gross income since he is required to live on FAA premises as a condition of employment. The Guam Director of Taxation, on the other hand, contends that § 119 does not apply in this case because Cox pays rent for his housing, rather than receiving housing in kind; and that even if § 119 does apply, Cox has failed to prove the elements of a § 119 exclusion.

III. DISCUSSION

Cox claims that the amount withheld from his salary for rent should be excluded from his gross income. Such exclusion would have the effect of taxing Cox as if he made less than other FAA directors, since the amounts withheld for rent would not be treated as income.

In order to receive this obviously advantageous tax treatment under § 119, the taxpayer must prove three elements:

Commissioner v. Anderson, 371 F.2d 59, 63 (9th Cir. 1966), cert. denied, 387 U.S. 906 , 87 S.Ct. 1687 , 18 L.Ed.2d 623 (1967).

In this case, the district court found to be lacking the third element which requires that lodging be furnished as a condition of employment. A review of the record reveals that Cox and his superior stated that Cox was required to reside in the FAA complex, but their statements were not supported by independent evidence or by a detailed explanation indicating why such residency was necessary. When pressed on cross-examination, Cox’s explanation was *176 ambiguous. His statements were not uncontroverted. The trial judge observed the demeanor of the witnesses and could have discounted their testimony as self-serving and tax motivated. On the face of this record, the trial court was not clearly erroneous in its finding that Cox was not required to live in the FAA complex as a condition of employment. Compare Caratan v. Commissioner, 442 F.2d 606 (9th Cir. 1971), (“condition of employment” finding reversed where the court was “left with the definite and firm conviction” that a mistake had been committed and where the tax court erroneously relied on its own business judgment as to whether the taxpayer’s job required his presence at all times).

Because we find that Cox failed to prove an essential element of a § 119 exclusion, we need not reach the question of whether § 119 applies at all where the FAA housing was furnished but paid for by a salary deduction. 1

IV. CONCLUSION

The trial court’s finding that Cox was not required to accept government housing as a condition of employment was not clearly erroneous. The decision is

AFFIRMED.

. Treas.Reg. § 1.119 — 1(b) permits the exclusion for lodging to be claimed where the three stated tests are met “irrespective of whether a charge is made” for the lodging. The regulation follows Boykin v. Commissioner, 260 F.2d 246 (8th Cir. 1958). The Director suggests that the recent Supreme Court decision in Commissioner v. Kowalski, 434 U.S. 77 , 98 S.Ct. 315 , 54 L.Ed.2d 252 (1977), which disallowed § 119 exclusion for cash meal allowances paid to state troopers in lieu of meals, would likewise bar an exclusion for lodging where, as here, a rental payment is deducted from the taxpayer’s salary. We need not, however, reach this question here.