K - Tax on Adjustments

Appendix K

Pacific Bell - - Phases 2A and 2B

Reconciliation of Income Tax Normalization & Flow Through for Adopted Audit Adjustments Other than CHCF-B

1997 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts

Adopted

Normalized

After-Tax

Adjustment Description

Reference ¹

Audit Adj.

Tax Rate

Tax Effect

Effect

SFAS 106: VEBA 3 Transfer

2A Decision, Appendix H, Line 7

9,838,000

40.746%

(4,008,591)

5,829,409

Unsupported Contingent Liabilities:

Revenues

Index No. 1

40,463,493

40.746%

(16,487,255)

23,976,238

Operating Expense

Index No. 10

89,166,316

40.746%

(36,331,707)

52,834,609

Total Unsupported Contingent Liabilities

129,629,809

(52,818,962)

76,810,847

Other Small Items

Local Competition

Index No. 6

40,974,049

40.746%

(16,695,286)

24,278,763

Incentive Pay Accrual

Index No. 11

34,353,665

40.746%

(13,997,744)

20,355,921

Uncollectible Settlements - RCRMS

Index No. 13

28,038,790

40.746%

(11,424,685)

16,614,105

SFAS 112

Index No. 16

9,594,151

40.746%

(3,909,233)

5,684,918

Sales and Use Tax

Index No. 25

777,410

40.746%

(316,763)

460,647

PIU Accrual

Index No. 68 (Index shows after tax.)

(14,673,001)

40.746%

5,978,661

(8,694,340)

USOA Rewrite Turnaround Accrual

Index No. 69 (Index shows after tax.)

(23,123,001)

40.746%

9,421,698

(13,701,303)

Total Other Small Items

75,942,063

(30,943,353)

44,998,710

TOTAL

215,409,872

(87,770,906)

127,638,966

1998 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts

Adopted

Normalized

After-Tax

Adjustment Description

Reference ¹

Audit Adj.

Tax Rate

Tax Effect

Effect

SFAS 106: Regulatory Asset Write Off

2A Decision, Appendix F, Line 7

279,536,000

40.746%

(113,899,739)

165,636,261

SFAS 106: PBOP Pre-funding TBO Adj.

2A Decision, Appendix I, Line 14

43,350,000

40.746%

(17,663,391)

25,686,609

SFAS 106: VEBA 3 Transfer

2A Decision, Appendix H, Line 12

60,012,000

40.746%

(24,452,490)

35,559,510

Contingent Liability Expense

Index No. 10

1,913,966

40.746%

(779,865)

1,134,101

Incentive Pay Accrual

Index No. 11

(40,739,899)

40.746%

16,599,879

(24,140,020)

Other Small Items

Local Competition

Index No. 6

7,963,946

40.746%

(3,244,989)

4,718,957

Uncollectible Settlements - RCRMS

Index No. 13

13,180,440

40.746%

(5,370,502)

7,809,938

Sales and Use Tax

Index No. 25

771,297

40.746%

(314,273)

457,024

Total Other Small Items

21,915,683

(8,929,764)

12,985,919

TOTAL

365,987,750

(149,125,369)

216,862,381

1999 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts

Adopted

Normalized

After-Tax

Adjustment Description

Reference ¹

Audit Adj.

Tax Rate

Tax Effect

Effect

SFAS 106: PBOP Pre-funding TBO Adj.

2A Decision, Appendix I, Line 11

7,225,000

40.746%

(2,943,899)

4,281,102

Pension Trust Fund Withdrawal

Exhibit Phase 2A: 409, Table 7 of 7

68,749,000

40.746%

(28,012,468)

40,736,532

Contingent Liability Expense

Index No. 10

11,765,136

40.746%

(4,793,822)

6,971,314

Incentive Pay Accrual

Index No. 11

35,061,088

40.746%

(14,285,991)

20,775,097

Other Small Items

Software Buy-Out Agreement

Index No. 9

44,465,490

40.746%

(18,117,909)

26,347,581

Uncollectible Settlements - RCRMS

Index No. 13

863,874

40.746%

(351,994)

511,880

Sales and Use Tax

Index No. 25

(2,405,419)

40.746%

980,112

(1,425,307)

Employment Tax Error

Index No. 26

7,333,353

40.746%

(2,988,048)

4,345,305

Total Other Small Items

50,257,298

(20,477,839)

29,779,459

TOTAL

173,057,522

(70,514,018)

102,543,504

Note 1: All References to Phase 2B Decision, Appendix A, except as noted.


Appendix K

Pacific Bell - - Phases 2A and 2B
Reconciliation of Income Tax Normalization & Flow Through for Adopted Audit Adjustments Other than CHCF-B

		1997 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts
		Adopted		Normalized	After-Tax
Adjustment Description	Reference ¹	Audit Adj.	Tax Rate	Tax Effect	Effect

SFAS 106: VEBA 3 Transfer	2A Decision, Appendix H, Line 7	9,838,000	40.746%	(4,008,591)	5,829,409
Unsupported Contingent Liabilities:
Revenues	Index No. 1	40,463,493	40.746%	(16,487,255)	23,976,238
Operating Expense	Index No. 10	89,166,316	40.746%	(36,331,707)	52,834,609
Total Unsupported Contingent Liabilities		129,629,809		(52,818,962)	76,810,847
Other Small Items
Local Competition	Index No. 6	40,974,049	40.746%	(16,695,286)	24,278,763
Incentive Pay Accrual	Index No. 11	34,353,665	40.746%	(13,997,744)	20,355,921
Uncollectible Settlements - RCRMS	Index No. 13	28,038,790	40.746%	(11,424,685)	16,614,105
SFAS 112	Index No. 16	9,594,151	40.746%	(3,909,233)	5,684,918
Sales and Use Tax	Index No. 25	777,410	40.746%	(316,763)	460,647
PIU Accrual	Index No. 68 (Index shows after tax.)	(14,673,001)	40.746%	5,978,661	(8,694,340)
USOA Rewrite Turnaround Accrual	Index No. 69 (Index shows after tax.)	(23,123,001)	40.746%	9,421,698	(13,701,303)
Total Other Small Items		75,942,063		(30,943,353)	44,998,710

TOTAL		215,409,872		(87,770,906)	127,638,966


		1998 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts
		Adopted		Normalized	After-Tax
Adjustment Description	Reference ¹	Audit Adj.	Tax Rate	Tax Effect	Effect

SFAS 106: Regulatory Asset Write Off	2A Decision, Appendix F, Line 7	279,536,000	40.746%	(113,899,739)	165,636,261
SFAS 106: PBOP Pre-funding TBO Adj.	2A Decision, Appendix I, Line 14	43,350,000	40.746%	(17,663,391)	25,686,609
SFAS 106: VEBA 3 Transfer	2A Decision, Appendix H, Line 12	60,012,000	40.746%	(24,452,490)	35,559,510
Contingent Liability Expense	Index No. 10	1,913,966	40.746%	(779,865)	1,134,101
Incentive Pay Accrual	Index No. 11	(40,739,899)	40.746%	16,599,879	(24,140,020)
Other Small Items
Local Competition	Index No. 6	7,963,946	40.746%	(3,244,989)	4,718,957
Uncollectible Settlements - RCRMS	Index No. 13	13,180,440	40.746%	(5,370,502)	7,809,938
Sales and Use Tax	Index No. 25	771,297	40.746%	(314,273)	457,024
Total Other Small Items		21,915,683		(8,929,764)	12,985,919

TOTAL		365,987,750		(149,125,369)	216,862,381


		1999 Increase/(Decrease) to Pacific's NOIIntrastate Regulated Amounts
		Adopted		Normalized	After-Tax
Adjustment Description	Reference ¹	Audit Adj.	Tax Rate	Tax Effect	Effect

SFAS 106: PBOP Pre-funding TBO Adj.	2A Decision, Appendix I, Line 11	7,225,000	40.746%	(2,943,899)	4,281,102
Pension Trust Fund Withdrawal	Exhibit Phase 2A: 409, Table 7 of 7	68,749,000	40.746%	(28,012,468)	40,736,532
Contingent Liability Expense	Index No. 10	11,765,136	40.746%	(4,793,822)	6,971,314
Incentive Pay Accrual	Index No. 11	35,061,088	40.746%	(14,285,991)	20,775,097
Other Small Items
Software Buy-Out Agreement	Index No. 9	44,465,490	40.746%	(18,117,909)	26,347,581
Uncollectible Settlements - RCRMS	Index No. 13	863,874	40.746%	(351,994)	511,880
Sales and Use Tax	Index No. 25	(2,405,419)	40.746%	980,112	(1,425,307)
Employment Tax Error	Index No. 26	7,333,353	40.746%	(2,988,048)	4,345,305
Total Other Small Items		50,257,298		(20,477,839)	29,779,459

TOTAL		173,057,522		(70,514,018)	102,543,504

Note 1: All References to Phase 2B Decision, Appendix A, except as noted.