Hospital Corporation of America and Subsidiaries - Page 32

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          respondent determined net adjustments to the gain (or loss) from            
          the sale of stock of the Subsidiaries for 1987 and 1988 in the              
          amounts of $564,053,714 and ($11,514,100), respectively.                    
                                       OPINION                                        
               Section 1001 governs the determination of gains and losses             
          on the disposition of property.  Commissioner v. Tufts, 461 U.S.            
          300, 304 (1983).  Section 1001(a) provides in part that the gain            
          from the sale or other disposition of property shall be the                 
          excess of the amount realized over the adjusted basis provided in           
          section 1011 for determining gain.  Section 1001(b) provides in             
          part that the "amount realized from the sale or other disposition           
          of property shall be the sum of any money received plus the fair            
          market value of the property (other than money) received."                  
               The Reorganization Agreement states that the purchase price            
          for the stock of the Subsidiaries was $2,099,970,000, payable               
          $855,164,281 in cash, $777,041,795 in assumption of the Bridge              
          Loan, $7,763,924 in assumption by the Subsidiaries of debt                  
          obligations of HCAII (for a total of $1,639,970,000 in cash and             
          debt assumption), and $460 million in (x) shares of class A                 
          preferred stock and class B preferred stock, and (y) Common Stock           
          Warrants.  For purposes of determining gain from the sale of the            
          stock of the Subsidiaries, the amount HCAII realized is the sum             
          of the cash HCAII received, the HCA debt HealthTrust assumed,               
          plus the fair market value of the Securities HCAII received from            
          HealthTrust.  See Nestle Holdings, Inc. v. Commissioner, 94 T.C.            




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