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1985 and 1986 because the major portion of its expenditures
during those years, namely, payments to FPCF and to AMH for
patient care, constituted prohibited inurement to the board
members. Petitioner also treats respondent's argument as an
alternative and does not ask us to grant it exempt status during
the aforesaid years if we conclude, as we do, that it lost such
status at an earlier date. In this connection, petitioner points
out that this issue is subsumed in the issues involved in docket
No. 27403-92X wherein petitioner filed a petition, in response to
respondent's action in respect of its request for exempt status
after October 1, 1983, seeking a declaratory judgment that it was
exempt in the years after the sale.
We now turn to the question of whether petitioner, as a
taxable entity during the years at issue herein, is entitled to
certain deductions in computing its taxable income. These
deductions are for amounts due FPCF, for grants to organizations
and patient care and for a claimed net operating loss
carryforward from its 1983 fiscal year.
FPCF
Petitioner had contingent liabilities to the FPCF at various
times during its fiscal year 1983 and subsequent taxable years
with respect to its hospital activities prior to the May 1983
sale. The deductibility of those liabilities to the extent that
they became fixed or paid during the years is at issue herein.
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