107 T.C. No. 6
UNITED STATES TAX COURT
HOSPITAL CORPORATION OF AMERICA AND SUBSIDIARIES, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 10663-91, 13074-91 Filed September 12, 1996.
28588-91, 6351-92.
Ps own, operate, and manage hospitals and related
businesses. For taxable year ended 1987, pursuant to
sec. 448, I.R.C., Ps not already using an overall
accrual method changed their method of accounting to
that method. Also during 1987, HCAII, a wholly owned
subsidiary of HCA, sold all of the stock of some
subsidiaries that owned and operated hospitals and
other facilities. On audit, R determined that for
certain of those subsidiaries (Category B Corporations)
Ps had to include in income for taxable year ended 1987
the entire sec. 481, I.R.C., adjustment relating to the
change in method of accounting required by sec. 448,
I.R.C. Ps contend that, even though the Category B
Corporations were sold during 1987, pursuant to sec.
448(d)(7)(C)(ii), I.R.C., HCA is entitled to include
ratably in income over a 10-year period the portion of
the sec. 481(a), I.R.C., adjustment attributable to the
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