Hospital Corporation of America and Subsidiaries - Page 26

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          Tax Reform Act of 1986, Pub. L. 99-514, sec. 801(d), 100 Stat.              
          2348.  Section 448(d)(7) provides coordination with section 481             
          for those taxpayers that are required by section 448(a) to change           
          from the cash method of accounting.                                         
               Section 481 was enacted during 1954.  It was designed to               
          prevent items of income or expense from being omitted or                    
          duplicated as a result of a change in method of accounting                  
          initiated by either the taxpayer or the Government.  S. Rept.               
          1622, 83d Cong., 2d Sess. 307-311 (1954).  Prior to the enactment           
          of section 481, consistent with rules laid down by the decided              
          cases, adjustments needed to prevent such omission or duplication           
          could be made only if the change in method of accounting was                
          initiated by the taxpayer.  Dearborn Gage Co. v. Commissioner, 48           
          T.C. 190, 200 (1967); S. Rept. 1622, supra at 307-311.  The                 
          provision does not apply, however, to adjustments attributable to           
          years before 1954 unless the change in method of accounting is              
          initiated by the taxpayer.  Sec. 481(a)(2).  Section 481(c)                 
          provides that a spread of the section 481(a) adjustment over more           
          than 1 year is allowed only as permitted under regulations.                 
          Regulations interpreting section 481(c) provide that a section              
          481(a) adjustment may be taken into account under terms and                 
          conditions agreed to by the Commissioner and the taxpayer.  Sec.            
          1.481-5, Income Tax Regs.                                                   
               Absent a provision similar to the cessation-of-business                
          acceleration provision, any portion of a section 481(a)                     




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