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petitioners resided in an ILU that is allocable to medical
care.19 Resolution of this issue depends in part on whether we
apply the percentage method or the actuarial method.
Additionally, we must decide whether petitioners are entitled to
medical deductions for amounts they claim are attributable to Mr.
Baker’s use of the pool, spa, and exercise facilities at AFVW.
Section 213(a) allows as a deduction any expenses that are
paid during the taxable year for the medical care of the
taxpayer, his spouse, and dependents and that are not compensated
for by insurance or otherwise. Estate of Smith v. Commissioner,
79 T.C. 313, 318 (1982). The deduction is allowed only to the
extent the amount exceeds 7.5 percent of adjusted gross income.
Sec. 213(a); sec. 1.213-1(a)(3), Income Tax Regs. The term
“medical care” includes amounts paid “for the diagnosis, cure,
mitigation, treatment or prevention of disease, or for the
purpose of affecting any structure or function of the body”.
Sec. 213(d)(1)(A); Estate of Smith v. Commissioner, supra at 318-
319.
19The portion of fees paid by residents in higher levels of
care, such as ALUs, SCUs, or the SNF, that is allocable to
medical care is not at issue in this case. For further
discussion of the treatment of costs incurred while residing in a
retirement home, see Levine v. Commissioner, 695 F.2d 57, 59-60
(2d Cir. 1982), affg. T.C. Memo. 1981-437, Estate of Smith v.
Commissioner, 79 T.C. 313, 319 (1982), and sec. 1.213-1(e)(1)(v),
Income Tax Regs.
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