- 35 -
service fees that is allocable to medical care. The method
provides a direct link between the actual fees paid by the
residents and the medical costs incurred by the CCRC during the
taxable year. Despite this, respondent asserts that the
actuarial method is more precise and accurate. Respondent freely
admits that the actuarial method is more complex, indeed, so
complex as to defy full explanation in testimony and on brief.
Both methods involve subjective judgments, so neither is immune
from differences of opinion. We hold under these circumstances
that petitioners are not compelled to adopt a new method, and we
decline respondent’s suggestion that the percentage method be
usurped by the actuarial method.
As noted above, use of the percentage method has been
sanctioned by respondent for over 35 years. In Rev. Rul. 67-185,
1967-1 C.B. 70, Rev. Rul. 75-302, 1975-2 C.B. 86, and Rev. Rul.
76-481, 1976-2 C.B. 82,21 the Commissioner addressed similar
situations involving the issue of whether the portion of a
monthly fee paid by individuals in connection with their
21We are aware that revenue rulings are not binding on this
Court or other Federal courts. Rauenhorst v. Commissioner, 119
T.C. 157, 171 (2002); Frazier v. Commissioner, 111 T.C. 243, 248
(1998). However, the public has a right to rely on positions
taken by the Commissioner in published guidance. Alumax, Inc. v.
Commissioner, 109 T.C. 133, 163 n.12 (1997), affd. 165 F.3d 822
(11th Cir. 1999); Am. Campaign Acad. v. Commissioner, 92 T.C.
1053, 1070 (1989); Nissho Iwai Am. Corp. v. Commissioner, 89 T.C.
765, 778 (1987); see also Rev. Proc. 89-14, sec. 7.01(5), 1989-1
C.B. 814 (taxpayers may rely on published revenue rulings in
determining the tax treatment of their own transactions).
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