Hospital Corporation of America and Subsidiaries - Page 7

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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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