Hospital Corporation of America and Subsidiaries - Page 19

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          calculate the Uncollectible Amount pursuant to the temporary                
          regulations.  Id.                                                           
               The Separate Receivable System of the Nonaccrual-Experience            
          Method                                                                      
               The so-called separate receivable system provided in the               
          temporary regulations applies the nonaccrual-experience method to           
          each account receivable which is eligible for that method.  Sec.            
          1.448-2T(e)(3), Temporary Income Tax Regs., 52 Fed. Reg. 22775              
          (June 16, 1987).  For any eligible receivable, the taxpayer                 
          includes in gross income only the amount of that receivable that            
          is recognized as gross income minus the Uncollectible Amount.               
          The Uncollectible Amount of any receivable is the amount of the             
          receivable outstanding at the close of the taxable year                     
          multiplied by a percentage.  The Amended Formula provides for the           
          determination of the percentage by dividing (a) total bad debts             
          (adjusted for recoveries) sustained during the current and 5                
          preceding taxable years (or a shorter period with the approval of           
          the Commissioner) by (b) the sum of the accounts receivable                 
          earned throughout that same 6-year (or shorter) period.                     
          Accordingly, the Amended Formula provides for the determination             
          of the denominator of the fraction on the basis of total sales              
          resulting in accounts receivable throughout the applicable                  
          period.  Sec. 1.448-2T(e)(2)(i), Temporary Income Tax Regs., 53             
          Fed. Reg. 12513-12514 (Apr. 15, 1988).  A taxpayer which has been           
          in existence for less than 6 years is to use its experience for             





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