upr000274 166

u i 1 General and administrative expenses used in the summary reflect the followingj Item 1949 1950 Recorded Adjusted Istimeted Incurred at L.V. #25,270 #25,600 #26,600 Allocated ; p ? 9,046 9,100 #23,270 #34,646 #35,700 Further analysis of these figures will be available with additional reclassification for purpose of the exhibit* Depreciation expense Is predicated on the lives and rates currently in use. In my opinion such rates could be increased. Taxes, other than Income, for 1950 reflect - Income taxes have been com puted as if the LVL&WCo. as well as the LA&SLRRCo. filed separate tax returns. However, the two have been considered as one, Insofar as the amount of the taxable net income is involved, I. e. the classification for corporations in excess of #50,000 annual net Income has been used. By so doing, , it makes no difference which of the two corporations are treated separately, as on page 2, or if the operations are merged. This would appear proper, as a difference in net earnings should not be permitted for rate purposes, merely by the device of the as­sumption as to corporate identity where the physical properties are as one and under common control.' The LVL&SfCo. and the £A&SLRRCo. are entitled to be treated as a separate corporation for income tax purposes. The customers of the LVL&WCo, should not be burdened, nor should they profit through any consolidated tax return of the holding company, i. e.