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proceeds from the sales of these goods had not been included in
income." Id. at 848.
In light of all the facts and circumstances, we conclude
that application of the substantial-identity-of-results test is
unwarranted in the instant case. We have held above that the
hybrid method is a permissible method under the regulations and
that it clearly reflects the taxable income of the hospitals.
We have considered other arguments raised by respondent but
find them unpersuasive. In view of our holding, we do not
address petitioners' contention that the legislative history of
section 801 of the Tax Reform Act of 1986, Pub. L. 99-514, 100
Stat. 2345 (adding section 448 to the Code, which requires
certain corporations, including hospitals, to change
prospectively beginning in 1987 to an overall accrual method),
demonstrates that Congress recognized that under prior law
hospitals could use the cash method or a hybrid method of
accounting. Also, we do not address petitioners’ contention that
they would be entitled to report on the installment method if the
hybrid method were found not to clearly reflect their income.
Additionally, we do not decide respondent’s contention that the
hospitals sold merchandise. Finally, as stated above, we do not
decide the issue of whether respondent changed the hospitals’
method of accounting during an earlier audit.
One final word. The instant case contains a voluminous
record and involves numerous factual issues to be decided by this
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