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considered 17 years of data such as the taxpayer’s gross
receipts, capital expenses, total investment, net taxable income,
total operating expenses, total depreciation, and the disputed
minimum items, in deciding that the taxpayer’s method of
accounting clearly reflected income. See id. at 569, 571.
Petitioner did not offer evidence from its years other than the
years at issue.
The court in Cincinnati noted that the record there
contained evidence that the ICC had adopted the minimum rule
after concluding that imposition of the minimum rule would not
distort income or cause the railroads' financial statements not
to clearly reflect income. See id. at 570. In contrast, here
petitioner offered no evidence that HCFA considered whether a
minimum expensing policy would cause financial statements of home
health care agencies not to clearly reflect income.
The taxpayer’s expensing method in Cincinnati was in
accordance with generally accepted accounting principles (GAAP).
See id. at 569-570. Petitioner contends that its minimum
expensing rule also complies with GAAP but offered no evidence to
support that contention.
The ICC required the taxpayers in Cincinnati and Union
Pacific to expense the items that were the subject of the
disallowed deductions. In contrast, Medicare guidelines permit,
but do not require, petitioner to expense the disputed assets.
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Last modified: May 25, 2011