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residence at a retirement home under a lifetime care contract was
deductible by the individuals as an expense for medical care
under section 213, subject to the limitations of the statute. In
the rulings, the taxpayers had entered into agreements with a
retirement home under which they became entitled to live in the
home and to receive lifetime care that included specified
residential accommodations, meals, and medical care. In exchange
for the promise of the lifetime care, the taxpayers paid a
monthly fee to the homes.
In Rev. Rul. 67-185, supra at 70, the taxpayers proved that
on the basis of the retirement home’s experience, a portion of
the monthly fee was for costs of providing medical care,
medicine, and hospitalization. The ruling cited the holding in
Rev. Rul. 54-457, 1954-2 C.B. 100, that where a university
charges a student a lump-sum fee which includes his education,
board, medical care, etc., the portion of the charge which was
allocable to medical care is considered a proper medical expenses
deduction if there is a breakdown showing the amount of the fee
allocable to medical care, or such information was readily
available to the university. Id. at 71. Rev. Rul. 67-185,
supra, then stated that the principle in Rev. Rev. 54-457, supra,
relating to allocation of the fee, was equally applicable to its
situation. Rev. Rul. 67-185, supra at 71, concluded:
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