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reflects income, we will not sustain respondent's
determination merely because it produces more income
tax for the taxable year under consideration. * * *
Disparity in amount is not, per se, necessarily
indicative of a failure to clearly reflect income.
* * * [Id.; fn. ref. omitted.]
In the instant case, the record as a whole suggests that a
substantial portion of the disparity between income reported on
the accrual method and income reported on the hybrid method
results from respondent's proposed accrual of revenue related to
room charges and ancillary services. Such ancillary services
would include the use of special facilities such as the operating
room, the recovery room, and the delivery room, as well as
laboratory tests, x-rays, physical therapy, and group and
individual therapy for psychiatric patients. Because such income
results from the provision of services, it historically has been
reported on the cash method.
We also are persuaded by the statement of Mr. Duis, one of
petitioners’ experts, that the increase in accounts receivable
reflected on petitioners' returns for the years in issue
primarily resulted from the rapid increase in the number of
hospitals that formed HCA over those years and not from a change
in business practice. Consequently, we do not find that the
disparity in income reported under the hybrid method from that
which would have been reported under an accrual method sufficient
reason in the instant case for requiring the hospitals to adopt
an overall accrual method of accounting.
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