- 36 -
year they were sold to HealthTrust is reasonable because the New
Parents ceased operating the businesses that gave rise to that
portion of the section 481(a) adjustment. Moreover, permitting
the New Parents to continue to account for a section 481(a)
adjustment attributable to businesses they no longer operate
would distort the income of the New Parents over the remaining
adjustment period.
Based on the foregoing, we conclude that petitioners must
include in income for 1987 all of the section 481(a) adjustment
relating to the change in method of accounting attributable to
the Category B Corporations.
To reflect the foregoing,
Appropriate orders
will be issued.
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