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assigned to audit petitioners' returns for taxable years ended
1983 and 1984 and taxable years ended 1985 and 1986 likewise
challenged petitioners' use of the hybrid method as modified for
reporting taxable income of the hospitals.
Without considering the effect of other adjustments, the use
of an overall accrual method of accounting would increase
petitioners' income for the taxable years ended 1981 through 1986
as set forth in the following table:
Year Amount
1981 $197,470,976
1982 41,916,668
1983 68,510,810
1984 95,125,139
1985 122,573,714
1986 62,405,334
For taxable years ended 1981 through 1986, the percentages
of revenue derived from operations of petitioners' U.S.-owned
hospitals from room and board (including nursing services) and
ancillary services, as reported on Forms 10-K that petitioners
filed with the SEC, were as follows:
1981 1982 1983 1984 1985 1986
Room and board 34% 34% 33% 32% 30% 27%
Ancillary
services 66 66 67 68 70 73
Ancillary services include, among other things, outpatient
treatments; physiotherapy; the use of the operating room, the
recovery room, the delivery room, or special facilities;
examinations; laboratory tests; x-rays; EKG’s; as well as the
administration or use of medical supplies. For psychiatric
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