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Petitioners claim that they are entitled to a medical
deduction related to the monthly service fees paid using the
percentage method and applying an allocation percentage of
approximately 41 percent. Petitioners also claim that they are
entitled to additional medical deductions as a result of Mr.
Baker’s use of the pool and spa facilities at AFVW.
Respondent agrees that petitioners are entitled to deduct
under section 213 a portion of the monthly service fees paid to
AFVW. However, respondent argues that the actuarial method
should be used to calculate the amount allocable to medical care.
Respondent contends that petitioners are not entitled to any
deductions for Mr. Baker’s use of the pool, spa, and exercise
facilities at Village West because petitioners have not
substantiated how the claimed amounts were calculated or that the
expenditures were paid for the primary purpose of and are
directly related to the medical care of the taxpayers.
I. The Allocation Methods
The primary disagreement between the parties with respect to
the monthly service fees issue is the appropriate method to use
to calculate the portion of the fees allocable to medical care.
Petitioners, relying on published guidance by the Commissioner,
argue that they are entitled to use the percentage method.
Respondent, relying on the expert report of Mr. Powell, argues
that the actuarial method should be used.
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