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nonaccrual-experience method. Respondent's adjustments had the
effect of disallowing petitioners' negative section 481(a)
adjustment attributable to the election of the nonaccrual-
experience method, but leaving unchanged the positive section
481(a) adjustment attributable to the repeal of the reserve
method of accounting for bad debts. Accordingly, respondent's
adjustments increased petitioners' income for each of the years
ended 1987 and 1988 by one-fourth of the positive section 481(a)
adjustment attributable to the repeal of the reserve method of
accounting for bad debts.
As calculated pursuant to the Black Motor formula, for
taxable years ended 1987 and 1988, without taking into account
the impact of the resolution of other issues raised in the notice
of deficiency, the percentage of petitioners' yearend accounts
receivable not accrued in income under the nonaccrual-experience
method are 19.94 percent and 20.62 percent, respectively.
On their consolidated return for the taxable year ended 1987
as originally filed, HCA, as parent of the affiliated group,
added $20 million to their consolidated income, and thereby
reduced by that amount the aggregate Uncollectible Amount as
determined under the modified periodic system. Petitioners added
the $20 million to their consolidated income to account for
possible future corrections or adjustments to their nonaccrual-
experience method computations following the issuance of final
regulations or on audit. In an amended consolidated return for
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