- 38 -
in two different ways. Although the Black Motor formula is a
conceivable method for calculating the Uncollectible Amount, and
perhaps even a better choice, it is not the only possible method,
and it is not even one of the two versions of the formula that is
described in H. Rept. 99-426, supra at 608, 1986-3 C.B. (Vol. 2)
at 608. Under the circumstances, we must defer to the
Secretary's choice of formula if the method he selected is
reasonable. Chevron U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. at 843; Peoples Fed. Sav. & Loan Association v.
Commissioner, 948 F.2d at 299-300; see also National Muffler
Dealers Association v. United States, 440 U.S. at 488; United
States v. Correll, 389 U.S. at 306-307.
Petitioners further argue essentially that the Amended
Formula cannot be valid because the formula does not equal the
hospitals' actual bad debt writeoff experience. We do not
believe that section 448(d)(5) requires an exact matching of the
Uncollectible Amount with a taxpayer's actual bad debt writeoff
experience. A statistical approximation of the Uncollectible
Amount determined under the prescribed formula appears to be all
that was contemplated by Congress. See H. Rept. 99-426, supra at
608, 1986-3 C.B. (Vol. 2) at 608, H. Conf. Rept. 99-841 (Vol. 2),
at II-288 (1986), 1986-3 C.B. (Vol. 4) 1, 288. As to the
nonaccrual-experience method, the conference report states the
following:
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