- 9 -
business and kept separate books and records. Each New Parent
continued to own and operate other hospitals, office buildings,
or medical facilities and remained in the hospital business as a
subsidiary of HCA.
For purposes of computing gain from the sale of the stock of
the Category A Corporations to HealthTrust, petitioners computed
HCAII's basis in that stock by taking into account each
subsidiary's earnings and profits through the date of sale. At
that time, the earnings and profits of each Category A
Corporation included only one-tenth of the section 481(a)
adjustment with respect to the change in method of accounting.
Petitioners anticipated that in HealthTrust's consolidated
Federal corporate income tax returns for the succeeding 9 taxable
years following 1987 the Category A Corporations would include
ratably in income the balance of their section 481(a) adjustments
relating to the change in method of accounting.
For purposes of determining gain from the sale of the stock
of the Category B Corporations to HealthTrust, petitioners
determined HCAII's basis in that stock based upon the values of
the assets and liabilities transferred by the New Parents to the
Category B Corporations as reflected on financial statement
balance sheets. Those assets included the full face amount of
the accounts receivable of the Category B Corporations, and hence
the assets encompassed some accounts receivable not theretofore
included in the income of those Category B Corporations employing
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011