- 11 -
the taxable year ended 1987 (amended return) filed September 9,
1991, HCA claimed that it was entitled to reduce consolidated
income, and thereby increase the aggregate Uncollectible Amount,
by $20 million. On audit, respondent allowed the claimed $20
million reduction in consolidated income by offsetting the
nonaccrual-experience method adjustment by that amount.
In the amended return, HCA also claimed that petitioners
were entitled to a refund of tax based on a computational
adjustment in the application of the nonaccrual-experience method
for certain petitioners whose stock was sold, or whose assets
were transferred to a subsidiary whose stock was sold, to
HealthTrust, Inc.--The Hospital Corporation (HealthTrust) in
September 1987. On petitioners' original return, the Original
Formula was applied to those petitioners by using the accounts
receivable as of the date of sale and by using the net writeoffs
of bad debts from January 1, 1987, through the date of sale. In
the amended return, the computation was made by annualizing the
net writeoffs of bad debts for the period from January 1, 1987,
through the date of the sale, thus increasing the Uncollectible
Amount for the taxable year 1987 by $7,366,123.
Petitioners do not charge or otherwise require interest to
be paid on their accounts receivable, they do not charge or
otherwise impose any penalties for failing to pay an account
receivable timely, and no portion of their accounts receivable
was owed on account of activities with respect to either (1)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011