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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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