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counseling and therapeutic recreational programs for the center's
patients. The center did not charge an entry fee. There were no
adjustments in the notice of deficiency pertaining to the health-
care center.
Petitioner's History
When petitioner entered into this industry in 1969, most
retirement facilities in existence were church-sponsored. These
were primarily life-care programs requiring a large nonrefundable
lump-sum payment.
Petitioner was among the first privately owned businesses to
enter this field. A total of 21 individuals contributed $5,000
each to start the company. When petitioner was preparing to
build its cluster homes and apartments, bank financing was not
available for retirement communities. Petitioner viewed the
entry fees and the cluster home purchases as a method of
financing.
Petitioner filed a Declaration of Condominium (Declaration)
with the Office of the Register of Deeds, Buncombe County, North
Carolina, on April 3, 1987. The purpose of the Declaration was
to create:
a condominium development providing for individual
ownership of the real property estates consisting of
the area of space contained in each dwelling unit in
said buildings, and the co-ownership by the individual
and separate owners thereof, as tenants in common of
all the remaining real property * * *.
In the Declaration, petitioner agreed to divide the subject
property into 16 "legally described freehold estates" consisting
of the 16 condominium units and one freehold estate consisting of
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