Rev. Rul. 68-525

The taxpayers, a husband and his wife, entered into agreements with a retirement home that is constructing an infirmary and apartment facilities, under which they are entitled to live in one of the apartments and to receive lifetime care. They paid a lump-sum payment that is apportioned between the cost of constructing the infirmary and the apartment, and are to pay a monthly fee for lifetime care.

Held, the lump-sum payment does not qualify as a medical expense deductible under section 213 of the Internal Revenue Code of 1954, since it is attributable to the construction of the infirmary and apartment and is not to provide medical care. Furthermore, in regard to the monthly fee for lifetime care, see Revenue Ruling 67-185, C.B. 1967-1, 70, which holds that where 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 cost of providing medical care for them, that portion of the fee is deductible as an expense for medical care in the year paid, subject to the limitations prescribed in section 213 of the Code.