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overall accrual method included as additional income one-tenth of
the income previously deferred under the hybrid method for years
ended prior to 1987. Those petitioners operating nonhospital
businesses not theretofore reporting on an overall accrual method
included additional income equal to one-fourth of the income
previously deferred under the cash method.
Also during 1987, pursuant to a reorganization plan of HCA,
effective September 1, 1987, HCA Investments, Inc. (HCAII), a
wholly owned subsidiary of HCA, sold all of the stock of certain
subsidiaries that owned and operated 104 hospitals, approximately
90 professional office buildings, and related medical facilities,
to HealthTrust, Inc.--The Hospital Company (HealthTrust)6 for a
combination of cash, preferred stock, and warrants to acquire
shares of HealthTrust common stock. The hospitals were located
in 22 States of the United States. Approximately 40 percent of
the hospitals were the only hospitals for the communities they
served, and approximately 20 percent of the remaining hospitals
were one of two hospitals for the communities they served.
In some instances, a subsidiary whose stock was sold to
HealthTrust operated one hospital, office building, or medical
6 Prior to Sept. 17, 1987, HealthTrust, under a different
name, was an inactive subsidiary of HCA, and HCAII owned all of
its stock. On Sept. 17, 1987, HCAII sold the shares of common
stock of HealthTrust that it then owned to an employee stock
ownership plan adopted by HealthTrust. Other issues relating to
the sale of the Category A Corporations and the Category B
Corporations to HealthTrust will be addressed in a separate
opinion subsequently to be released.
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