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In years thereafter, an adjustment should have been made to
January bills removing revenues from the unbilled period of the
prior taxable year, and a corresponding adjustment should have
been made to include revenue from the unbilled period for the
current year for both gas costs and nongas margin. The relevant
legislative history suggests:
where it is not practical for the utility to determine
the actual amount of services provided through the end
of the current year, this estimate may be made by
assigning a pro rata portion of the revenues determined
as of the first meter reading date or billing date of
the following taxable year. [See S. Rept. 99-313,
supra, 1986-3 C.B.(Vol. 3) at 121.]
Respondent has made the necessary adjustment in the statutory
notice, and respondent’s determination of this issue is
sustained.
Section 1341 Issue
Petitioner also argues that it is entitled to section 1341
treatment for the amount by which it reduced utility rates from
1987 to 1990 to compensate for excess deferred Federal income
taxes. Section 1341(a) provides in pertinent part:
SEC. 1341(a). In General.--If–-
(1) an item was included in gross income for
a prior taxable year (or years) because it
appeared that the taxpayer had an unrestricted
right to such item;
(2) a deduction is allowable for the taxable
year because it was established after the close of
such prior taxable year (or years) that the
taxpayer did not have an unrestricted right to
such item or to a portion of such item; and
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