Delbert L. and Margaret J. Baker - Page 37

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                    Accordingly, where the taxpayers, a husband and                   
               his wife, pay a monthly life-care fee to a retirement                  
               home, and prove that a specific portion of the fee                     
               covers the costs of providing medical care for them,                   
               that portion of the fee is deductible by the taxpayers                 
               as an expense for medical care in the year paid,                       
               subject to the limitations prescribed in section 213 of                
               the Code.[22]                                                          
               In Rev. Rul. 75-302, supra, the taxpayer, pursuant to a                
          lifetime care contract with a retirement home, was required to              
          pay a lump-sum fee.  The Commissioner ruled that the portion of             
          the lump-sum fee that was properly allocable to the taxpayer’s              
          medical care was deductible as an expense for medical care in the           
          year paid, subject to the limitations in section 213.                       
               The facts involved in Rev. Rul. 76-481, supra, are similar             
          to those in Rev. Rul. 67-185, supra.  Rev. Rul. 76-481, supra at            
          82, noted that the fees were calculated without reference to any            
          similar contract with other patients at the institution and was             
          not medical insurance.  Additionally, because the home had not              
          been in operation for a sufficient length of time to demonstrate            
          from its own financial experience what portion of the fees was              
          allocable to medical care of the residents, the home used long-             
          term financial information from a comparable retirement home.               
          Id. at 83.  The home determined that 15 percent of the monthly              
          fee would be used to discharge the home’s obligations to provide            
          medical care to its residents.  Id.                                         

               22See also Rev. Rul. 68-525, 1968-2 C.B. 112 (relying on the           
          statement in Rev. Rul. 67-185, 1967-1 C.B. 70).                             





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