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customers who were not customers of petitioner during the years
of overcollection because they had only recently moved into
petitioner’s service area. There was also no interest component
to the rate reductions, and no out-of-pocket payments in the form
of checks or bill credits were made. In sum, petitioner was not
repaying its customers the excess deferred Federal income tax
that it collected in prior years. Rather, the rate reductions
served only to reduce income in future years and did not directly
compensate petitioner’s customers for prior overcollection.
Because we conclude that petitioner is not entitled to a
deduction, petitioner fails to qualify for the preferential
treatment of section 1341 for the taxable years in issue.
In Dominion Resources, Inc. v. United States, supra, refunds
of the entire amount of unprotected excess deferred Federal
income tax were made to customers within 60 days of the
regulatory authority’s order to refund excess deferred Federal
income tax, whereas, in the cases at hand, the returns were
spread out over 3 years. Also, the media used by the taxpayer in
Dominion Resources to carry out such refunds were wire transfers
to customers, checks to customers, or one-time credits on
customers’ bills. See id. at 532-533. Finally, at least some of
the utility’s customers received interest on a portion of their
refund from the date when the income tax rates lowered until the
date of refund. See id. at 533. These factors, which differ
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