Officer Motor Vehicle Policy


Purpose

This policy provides for the assignment of an automobile to
those officers who have a continuous need for business
transportation to direct the activities of their
subordinates and to otherwise conduct company business.  It
is also in the Corporation's best interests for its officers
to be involved in community activities including certain
civic and social affairs, and automobiles are provided to
the officers to facilitate participation in these
activities.  There may be occasions where the appropriate
driver is the officer's duly licensed spouse.

Automobiles may be purchased or leased, at the discretion of
the employing company.  The assigned company motor vehicle
support group will be responsible for the maintenance of the
automobile on a routine basis.  A vehicle credit card will
be provided to the officer to facilitate the purchase of gas
and oil during extended trips.


Tax Considerations

The procedures contained in this document constitute a
reasonable approach to the requirement of the tax laws as we
understand them at this time.  Revisions to the IRS
regulations or changes in the laws themselves could cause
further changes in these procedures.

Internal Revenue Service (IRS) regulations currently require
an employer to include in an employee's taxable income the
value of personal use of an employer provided motor vehicle.
Business deductions and tax credits for automobiles used
less them 100% for "qualified business use" are available
only in proportion to business usage.  "Qualified business
use" includes personal use by employees when the "fair
value" of such use is treated as compensation.

Accordingly, income will be imputed to each officer on an
annual basis in accordance with the Annual Lease Value
special rule established by the IRS.  For the purpose of
this plan, the annual reporting period is defined as
November 1 of the prior year through October 31 of the
current year.  The annual lease value determination will be
made during November of the current year with resulting
taxable compensation imputed to the officer prior to year-
end.  Generally, lease value is determined by the age, make,
model and purchase price of the vehicle.

To facilitate proper tax treatment, the annual lease value
for each automobile will be prorated among the three
categories, based upon each category's respective mileage as
a percent of the total miles driven during that reporting
period.  Each category's portion of the annual lease value
will receive the following tax treatment:

  Out-of-town Business:  Trips of a business nature which
  exceed 50 miles from the officer's residence will be
  categorized as business mileage.  The prorated annual
  lease value associated with this category will be
  considered as a fully deductible business expense for the
  employing company.  No taxable compensation will accrue
  to the employee for substantiated out-of-town business
  trips.
  
  Out-of-town Personal:  Trips of a personal nature which
  exceed 50 miles from the officer's residence will be
  categorized as out-of-town personal mileage.  The
  prorated annual lease value associated with this category
  will be treated as taxable compensation to the employee.
  There will be no gross-up of these amounts for applicable
  taxes.  The employee will be responsible for any
  resulting tax obligations associated with these amounts.
  
  In-town Personal:  The remaining mileage driven during
  the reporting period (excluding reported business and out-
  of-town personal mileage) will be categorized as in-town
  personal mileage.  In all instances, the daily commuting
  between the officer's residence and his/her primary
  officer location will be included in this category,
  regardless of the distance between these two locations.
  The prorated annual lease value associated with this
  category will be treated as taxable compensation to the
  employee.  These amounts will be grossed-up for
  applicable taxes and appropriate payroll withholdings
  applied.


Reporting Requirements

In order to minimize required record keeping on the part of
both the company and the officer, the following reporting
procedures have been developed.  It is crucial that these
procedures be followed in order to retain for the company
any tax benefits for motor vehicle expenses associated with
officer vehicles.

Exhibit A, Report of Monthly Officer Data, should be used to
log and report each out-of-town trip made during the course
of the month, whether of a business or personal nature.  An
"out-of-town" trip is defined as one which is at lease 50
miles one-way from the officer's primary residence.  Round
trips may be reported as a single line item for simplicity.
A brief business description must be provided in the
appropriate field.  Personal trips should be so noted.  If
no out-of-town trips occur, the report should be marked
"NOTHING TO REPORT" for documentation purposes.

The completed report should be forwarded by the 10th of the
following month to:

               Executive Payroll Office
               15B04 Campanile
               1155 Peachtree Street NE
               Atlanta, GA  30367-6000

A copy should be retained by the officer's secretary in the
event the original is lost.

It is the responsibility of the motor vehicle maintenance
organization in each company to record the odometer readings
of each officer vehicle at the beginning and end of the
annual reporting period and at the time of acquisition or
disposition of the vehicle, if appropriate.  Should a single
vehicle be assigned to more than one officer during the
course of the year, an interim odometer reading should be
taken at the time of transfer between the two officers to
ensure proper income applications.

A detailed listing by vehicle of the odometer readings,
along with the name of the officer to which the vehicle was
assigned and the period of assignment, must be reported by
the 5th workday of November to:

               BellSouth Corporate Tax Office
               15K09 Campanile
               1155 Peachtree Street NE
               Atlanta, GA  30367-6000

Upon receipt, the Corporate Tax Office is responsible for
computing the annual lease value to be applied to each
vehicle and forwarding these amounts along with other
pertinent information to the Executive Payroll Office by
November 15.

The Executive Payroll Office is responsible for categorizing
the mileage reported by each officer and developing the
proration factors to be applied to the annual lease value
for each category.  The Executive Payroll Office is also
responsible for ensuring that the appropriate tax treatment
is afforded the officer with respect to the income resulting
from the automobiles assigned to him/her during the
reporting period.  Exhibit B provides an example of the
proration, gross-up and tax withholding processes.
  
  
                                                   Exhibit A

               REPORT OF MONTHLY OFFICER DATA



OFFICER NAME: ________                FOR:   ___________________
                                             (Month)      (Year)

Prepared by: ___________              Telephone:________________
                              


MOTOR VEHICLE INFORMATION  (Report business or personal
trips exceeding 50 miles one-way from officer's residence)

VEHICLE NUMBER  ____________________________


 DATE    FROM      TO        BUSINESS REASON       MILES
                                                   DRIVEN
                                                      
                                                      
                                                      

            Total Business Miles Reported   ______________

 Total Out-of-town Personal Miles Reported  ______________




LICENSE FEE EXEMPTIONS  (Report number of days worked
outside jurisdiction)

CITY OF BIRMINGHAM, AL  _____  JEFFERSON COUNTY, AL   ___________




EXCEPTION TIME REPORTING   (Report number of hours worked
during month on specified activity)

 GRASS ROOTS  ____________ OTHER:_______________________________
                 (hours)                (description)


 FED PAC   ____________ OTHER:__________________________________
                 (hours)                (description)

                                                   Exhibit B
                                                            
                OFFICER MOTOR VEHICLE POLICY
   WORKSHEET FOR COMPUTING IMPUTED INCOME, WITHHOLDING AND
                          GROSS-UPS

NAME                YEAR
________________________ _________

1 DEVELOPMENT OF PRORATION FACTORS                  
 .
  a.  Annual Lease Value (from BellSouth    $4,850.00
       Tax Office)                                  
  b.  Odometer at beginning of period       12,650  see Note a.
       (Nov 1 of prior year)                            
  c.  Odometer at end of period (Oct 31     24,773  see Note a.
       of current year)                                 
  d.  Total miles during annual reporting   12,123  see Note a.
       period (line 1c - line 1b)                       
  e.  Total out-of-town business miles       2,000  
       from logs
  f.  Total out-of-town personal miles         252  
       from logs
  g.  Total in-town personal miles (line     9,871  
       1d - line 1e - line 1f)
                                                    
2 DEVELOPMENT OF IMPUTED INCOME FOR OUT-OF-TOWN PERSONAL
  a.  Prorata share of annual lease value   100.82  
       includible in income
       (line 1a * line 1f / line 1d)
  b.  Additional includible at $.055 per     13.86  
       mile (line 1f * $.055)
  c.  Total imputed income for out-of-      114.68  
       town personal  (line 2a + line 2b)
                                                    
3 DEVELOPMENT OF IMPUTED INCOME FOR IN-TOWN PERSONAL
  a.  Prorata share of annual lease value   3,949.05
       includible in income
       (line 1a * line 1g / line 1d)
  b.  Additional includible at $.055 per    542.91  
       mile (line 1g * $.055)
  c.  Total imputed income for in-town      4,491.96
       personal (line 3a + line 3b)
                                                    
4 DEVELOPMENT OF GROSS-UP FOR IN-TOWN PERSONAL
  Rates:                                            
    r1=Federal     Highest expected rate    33.93%  
                   for federal
    r2=FICA-OASDI  For Gross-up (FICA        0.00%  
                   max will not be met)
    r3=FICA-HI     For Gross-up (FICA max    0.00%  
                   will not be met)
    r4=FICA-OASDI  For Withholding           0.00%  see Note b.
                   (FICA max will be met)    
    r5=FICA-HI     For Withholding (FICA     0.00%  see Note b.
                   max will be met)   
    r6=State       Highest rate for state    5.00%  
    r7=Local 1     Highest rate for          0.00%  
                   jurisdiction
    r8=Local 2     Highest rate for          0.00%  
                   jurisdiction
  a.  Gross-up factor   [100% / (100% -     1.6375  
      r1 - r2 - r3 - r6 - r7 - r8)]
  b.  Total imputed income (line 3c *       7,355.58
      line 4a)                                     
  b.  Federal income tax grossed-up and     2,639.02
      withheld (r1 * line 3c)                  
  c.  FICA-OASDI grossed-up and withheld        0.00  
      (r2 * line 3c)
  d.  FICA-HI grossed-up and withheld           0.00  
      (r3* line 3c)
  c.  FICA-OASDI withholding only (r4 *         0.00  
      line 3c)
  d.  FICA-HI withholding only (r5 * line       0.00  
      3c)
  e.  State income tax grossed-up and         224.60  
      withheld (r6 * line 3c)
  f.  Local 1 income tax grossed-up and         0.00  
      withheld (r7 * line 3c)
  g.  Local 2 income tax grossed-up and         0.00  
      withheld (r8 * line 3c)
  h.  Total taxes withheld (sum lines 4a    2,863.62  
      through 4g)                                   
                                                    
NOTES:                                              
a. For 1986 and later years, the annual reporting          
   period begins with November 1 of the preceding year
   and ends October 31 of the current year.
b. FICA taxes must be withheld if FICA wage maximum has    
   not been reached.  No gross-up will be applied if it
   is expected that the FICA maximum will be reached by
   year-end.