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cases, all of the hospitals, office buildings, and related
facilities owned by a subsidiary (i.e., a Category A Corporation)
were divested. In that case, the stock of the Category A
Corporation was transferred to another wholly owned subsidiary of
HCA (HCAII) which in turn sold the stock of the Category A
Corporation to HealthTrust. The parties agree that under those
circumstances, in effect, the section 481(a) adjustment relating
to the change in method of accounting required by section 448(a)
that was attributable to the Category A Corporation remains with
the Category A Corporation and henceforth should be reported
ratably over the remaining applicable spread period in the
consolidated Federal corporate income tax returns filed by
HealthTrust for succeeding tax years.
In other cases, not all of the hospitals, office buildings,
and related medical facilities owned and operated by a subsidiary
were divested. In those cases, the HCA subsidiary (i.e., the New
Parent) formed a New Subsidiary (i.e., a Category B Corporation)
to which the New Parent transferred the Facilities that were to
be divested. The New Parent, however, continued to own and
operate at least one other hospital, professional office
building, or related medical facility. The New Parent then
transferred the stock of the Category B Corporation to HCAII,
which in turn sold that stock to HealthTrust. The parties agree
that the portion of the section 481(a) adjustment relating to the
change in method of accounting required by section 448(a) that is
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Last modified: May 25, 2011