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and $5,142 for the years 1997 and 1998, respectively.13
Respondent’s determination for 1997 was based on Mr. Dalton’s
determination that $374 of the monthly service fees per residence
in an ILU was allocable to medical care.14 The determination for
1998 was calculated by multiplying the 19.01-percent allocation
figure determined by Mr. Dalton by petitioners’ total monthly
service fees paid to AFVW.15 These determinations are based on
the percentage method, not the actuarial method.16 Respondent
completely disallowed petitioners’ claimed deductions for both
years relating to Mr. Baker’s use of the pool, spa, and exercise
facilities at Village West. The remaining claimed medical
deductions were allowed.
Respondent subsequently sought the advice of Alwyn V. Powell
(Mr. Powell), an actuary, for the purpose of determining the
portion of the monthly services fees allocable to medical care.
On the basis of Mr. Powell’s expert report, respondent now
asserts that $4,584 and $5,304 are the correct amounts allocable
13The amounts stated in this paragraph are before
application of the 7.5-percent floor contained in sec. 213(a).
14$374 x 12 months = $4,488.
15($2,254 x 12 months) x 19.01 percent = $5,142.
16Respondent’s determinations based on the percentage method
are inconsistent because for 1997 he determined the amount
allocable to medical care based on the weighted average of
monthly service fees paid by ILU residents but for 1998 he
determined the amount allocable based on the actual monthly
service fees paid by petitioners.
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