114 T.C. No. 36
UNITED STATES TAX COURT
FLORIDA PROGRESS CORPORATION & SUBSIDIARIES, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2961-97. Filed June 30, 2000.
U, a public utility filing consolidated Federal
income tax returns with P, engaged in the retail and
wholesale distribution of electricity and related
services. Federal income tax rates were reduced in
1986 pursuant to the Tax Reform Act of 1986, Pub. L.
99-514, sec. 821, 100 Stat. 2372, creating an excess in
deferred Federal income tax collected from customers of
U. U was required to adjust utility rates in 1987 and
1988 to compensate for this overcollection.
U was allowed to collect funds equal to its
projected fuel and energy conservation costs. Pursuant
to regulatory law, monthly collections remained fixed
over a 6-month recovery period in order to decrease the
volatility of customers’ bills.
1. Held, U’s rate reductions from 1987 through
1990 to compensate for excess deferred Federal income
tax are not deductible business expenses within the
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