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FCC 32.22
Revised as of October 2, 2015
Goto Year:2014 | 2016
  § 32.22   Comprehensive interperiod tax allocation.

   (a) Companies shall apply interperiod tax allocation (tax normalization) to
   all book/tax temporary differences which would be considered material for
   published financial report purposes. Furthermore, companies shall also apply
   interperiod  tax allocation if any item or group of similar items when
   aggregated would yield debit or credit entries which exceed or would exceed
   5 percent of the gross deferred income tax expense debits or credits during
   any calendar year over the life of the temporary difference. The tax effects
   of book/tax temporary differences shall be normalized and the deferrals
   shall be included in the following accounts:

   4100, Net Current Deferred Operating Income Taxes;

   4110, Net Current Deferred Nonoperating Income Taxes;

   4340, Net Noncurrent Deferred Operating Income Taxes;

   4350, Net Noncurrent Deferred Nonoperating Income Taxes.

   In lieu of the accounting prescribed herein, any company shall treat the
   increase or reduction in current income taxes payable resulting from the use
   of flow through accounting in prior years as an increase or reduction in
   current tax expense.

   (b)  Supporting  documentation shall be maintained so as to separately
   identify  the  amount of deferred taxes which arise from the use of an
   accelerated method of depreciation.

   (c) Subsidiary records shall be used to reduce the deferred tax assets
   contained in the accounts specified in paragraph (a) of this section when it
   is likely that some portion or all of the deferred tax asset will not be
   realized. The amount recorded in the subsidiary record should be sufficient
   to  reduce  the  deferred tax asset to the amount that is likely to be
   realized.

   (d) The records supporting the activity in the deferred income tax accounts
   shall be maintained in sufficient detail to identify the nature of the
   specific temporary differences giving rise to both the debits and credits to
   the individual accounts.

   (e) Any company that uses accelerated depreciation (or recognizes taxable
   income or losses upon the retirement of property) for income tax purposes
   shall normalize the tax differentials occasioned thereby as indicated in
   paragraphs (e)(1) and (e)(2) of this section.

   (1) With respect to the retirement of property the book/tax difference
   between  (i) the recognition of proceeds as income and the accrual for
   salvage  value  and  (ii)  the book and tax capital recovery, shall be
   normalized.

   (2) Records shall be maintained so as to show the deferred tax amounts by
   vintage year separately for each class or subclass of eligible depreciable
   telephone plant for which an accelerated method of depreciation has been
   used for income tax purposes. When property is transferred to nonregulated
   activities, the associated deferred income taxes and unamortized investment
   tax credits shall also be identified and transferred to the appropriate
   nonregulated accounts.

   (f) The tax differentials to be normalized as specified in this section
   shall also encompass the additional effect of state and local income tax
   changes on Federal income taxes produced by the provision for deferred state
   and local income taxes for book/tax temporary differences related to such
   income taxes.

   (g)  Companies  that  receive  the  tax  benefits from the filing of a
   consolidated income tax return by the parent company, (pursuant to closing
   agreements with the Internal Revenue Service, effective January 1, 1966)
   representing the deferred income taxes from the elimination of intercompany
   profits for income tax purposes on sales of regulated equipment, may credit
   such  deferred taxes directly to the plant account which contains such
   intercompany  profit  rather than crediting such deferred taxes to the
   applicable accounts in paragraph (a) of this section. If the deferred income
   taxes are recorded as a reduction of the appropriate plant accounts, such
   reduction shall be treated as reducing the original cost of the plant and
   accounted for as such.

   [ 51 FR 43499 , Dec. 2, 1986, as amended at  59 FR 9418 , Feb. 28, 1994]

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Goto Section: 32.21 | 32.23

Goto Year: 2014 | 2016
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