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cost of their ILUs. Accordingly, we hold that the allocation
percentage must be applied based on the number of residents and
the average weighted monthly service fees (or weighted annual
service fees in the case of residents living in ILUs for the
entire year).
On the basis of the undisputed assumptions by AFVW and our
findings above, we have calculated the amounts allocable to ILU
residents of Village West for medical care related to their
monthly service fees. Our calculations show that the amounts of
$7,766 and $8,476 paid by petitioners as service fees for 1997
and 1998, respectively, were for medical care. The details of
our calculations are contained in the attached appendix.
IV. Deductions for Use of Pool, Spa, and Exercise Facilities
Petitioners claim that they are entitled to deductions for
Mr. Baker’s use of the pool, spa, and exercise facilities
because: (1) The use of the facilities was necessary to
alleviate his chronic illnesses; and (2) a portion of the monthly
service fees is properly allocable to the operation and
maintenance of these facilities. Respondent argues that no
deductions are allowable because Mr. Baker’s use of the
facilities was personal in nature, any expense related to use of
the facilities would otherwise have been incurred by AFVW
residents, and the methodology used by petitioners to allocate a
portion of the monthly service fees to the operation and
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