Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-30

commissions have recently questioned
the propriety Of charging the federal
income tax as a part Of operating ex-
penses. This commission concurs in the
opinion that the federal income tax law
contemplates that the burden shall be
imposed on the corporation and paid
out of its net profits and not passed
on to the public.
1T appears, too, that the contractual
relations between the petitioning COM
Company, whereby the former pay no
part of the fixed charges on the invest
ment Of the Potomac Electric Power
Company in the Benning power plant
and In the tr1nsnfis9ion and 4suhetztto11
equipment used Jointly by all OF, thsm,
ton was first considered by the COM
mission. Computations made in 1917 In
dicated that the annual operating ex-
psslses OF the railway companies would
be Increased by approximately $780,
oQ0 IL they bore their share Of the hxed
charges above referred to. OF this
amount. $132.000 was applicable to the
companies railway operations within
the District of Columbia. Develop
ments since 1917 indicate that this
amount should be increased. but. for
the purpose Of this hearing. it is sufii-
Of the railway companies would be in
creased by at least 1882. 900 per annum.
jf they dealt at arms length with the
power company.
Making the three adjustments out
lined above. the companies. actual net
proximately s475.ss7.23, instead OF
S510,4S9.77, as shown by the books.
Net Income Available.
"The companies stated in their Pc
tition and submitted evidence to show
that the net income available for re-
turn for the six-month period ended
October 81. 1920, as shown by their
books. does not fully reflect the pres
ent or prospective operating costs,
mainly for the reason that coal prices
have advanced subsequent to that
date and that the actual expenditures
on roadway and structures have ex-
ceeded the charges for maintenance
and depreciation as they have been
entered upon the companies books.
They claim. further. that reduction
Of approximately 2 per cent in volum e
Of traffic may be expected during the
next few months.
'As to coal. it appears from the tes-
timony that the companies. claim for
an allowance of $s7.73S.05 represent
ing the amount by which operating
expenses for the six month period
would have been increased had coal
been purchased at present prices) is
based upon the highest price paid for
coal since October 81. 1920, although
the testimony shows that recent pur-
chases have been at a price of only
72 cents per ton in advance Of the
contract price. If the most favorable
price for open market purchases OF
coal be used, the amount of $37,73S,05
Is reduced to $25.700.30.
LAS to increased costs for mainte-
nance and depreciation, the testimony
shows that the companies have been
setting aside for this purpose ap-
proximately $4,000 month since
May 1. 1920. following a plan present
ed by them to the commission in two
letters dated December 1. 1918, and
June 8, 1920. 1t Is claimed by the petit
tioners that actual expenditures have
exceeded this amount b, $9.809.12 peI
month. or total of 81 ,.854.71 for tn
six-month period. In view Of the fa7.
that the commission has consider =,
above the effect of the capitalizatJ y,
Of the proper proportion Of the cost
of major renewals and replacing nts
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