- 33 -
The adjustments calculated for 1972 pursuant to the hybrid
method included adjustments resulting from the changes in
accounts receivable, accounts payable, and supplies for 1972, and
also the cumulative balances in such accounts. No adjustment was
made to subtract the corresponding portion of 1971 year-end
accounts receivable (i.e., the beginning of the year balance for
1972). The adjustment for taxable year ended 1973 was computed
in the same manner, except that the amount that was included in
income for 1972 was subtracted from the 1973 year-end cumulative
balance to determine the amount to be included for 1973. The
resolution of the accounting adjustment and certain other
adjustments raised in the notice of deficiency issued for taxable
years ended 1972 and 1973 were reflected in a stipulation filed
with the U.S. Tax Court. Petitioners litigated another issue for
taxable years ended 1972 and 1973 in the U.S. Tax Court.14
1974-75 Audit
While the Nashville Appeals Office was considering the
resolution of petitioners' taxable years ended 1972 and 1973, a
team of revenue agents concluded their audit of petitioners'
returns for taxable years ended 1974 and 1975. The RAR for those
years raised numerous issues, including a challenge to the use of
the cash method of accounting by some of HCA's subsidiaries. The
14
See Hospital Corp. of America v. Commissioner, 81 T.C. 520
(1983).
Page: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 NextLast modified: May 25, 2011