Highland Farms, Inc. and Subsidiary - Page 14

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          occupancy, refunds would be made in accordance with a schedule              
          attached to the contract, subject to a minimum discount of 5                
          percent of the entry fee.  Such a schedule is not part of the               
          record; however, after the first 5 percent the first year, the              
          balance of the entry fee is taken into income by petitioner over            
          the next 19 years.                                                          
          Rest Home                                                                   
               The 30-bed rest home provided 24-hour nursing care in a                
          homelike environment.  Many private rooms allowed residents to              
          use their own furnishings, creating a homelike atmosphere in an             
          institutional setting.  All meals, housekeeping, and laundry                
          services were provided.  The rest home did not charge an entry              
          fee.  There were no adjustments in the notice of deficiency                 
          pertaining to the rest home.                                                
          Health-Care Center                                                          
               The health-care center (center) was a 60-bed licensed,                 
          skilled nursing facility to serve residents' medical needs and              
          was approved by Medicare, Medicaid, and major insurance carriers.           
          All Highland Farms residents had 24-hour skilled nursing care               
          available to them at a moment's notice.  Nursing care could also            
          be provided within a residence for a limited time with the prior            
          approval of the residence director.  Residents of Highland Farms            
          unable to care for themselves, in a short-term or long-term                 
          illness, were given priority for a bed in the center.  The center           
          offered physical, speech, and occupational therapy.  The center's           
          Social Services and Activities Department offered full-time                 





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