The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-01-20
JUGGLING OF
ACCOUNTS LAID
TO POWER co.
Funds Switched to Pay
Both Dividends, Taxes,
Minton Says.
PUZZLED BY TRANSFER
Step, If Taken, Violated
Law, Is Opinion of
Accountants.
BY BASIL GALLAGHER
Times stan Writer

The Indianapolis Power and Light
Company in 1881 paid the federal
government $751;, 449.7 rs, following q
demand for an additional corpora
ton income tax, according to ar
analysis Of company reports to the
public service commission. now in
the possession of Sherman Minton
public counselor.
Examiners we're sent to this city
by the treasury department to scan
the books of the light company, at
that time. and a demand was made
for the additional money. accord
ing to investigators.
The light company, it was dis
closed today. paid promptly.
Payment of this demand for adj
ditional tax would have depleted
the corporate surplus for the period
and the payment of dividends (al-
ways most necessary function of
a privately owned utility, according
to experts) would have been impos-
sible and illegal, it was asserted.
Sum of S525,OO0 Awaited
The common stockholders (the
Utilities Power and Light Corpora
tom were in Chicago awaiting the
annual dividend The sum OF
s525,0O0 was due the holding COM
pany in the matter of dividends
utility experts assert, and it was UP
to the local light company to pay
the government and at the same
time appease the cravings of Nam
mon," Mr.. Minton said.
In order to facilitate the payment
of the common stock dividends the
company, it is alleged from a study
OF their reports to the public Serv-
ice commission, transferred from its
reserve for depreciation" the sum
of S551 .449.73 to the surplus" &C
count.
Reports Of the company to the
public service commission, accord
ing to Mr.. Minton, disclose that the
dividends paid in 1881 on common
stock amounted to $525, 900. --zs4
Utility experts allege from a study
of the reports of the company to
the commission that the transfer of
the sum of s551 .44973 from the ode
probation reserve" fund was made
for the purpose Of paying the sum
Of S525,000 to the holding company
as dividends on common stock.
The effect on the gross income"
item, according to the accountants,
was that this amount was decreased
for the year, the tax was accrued
and the accrued tax was trans
ferred to surplus" during the fol-
lowing year.
There are few companies, &C
countantS assert, which do not
compute their taxes each month
during the year so that at the end
of their business year they know
exactly their liability to the gov
eminent. Most companies, it was
said. make the necessary adjust
mentS for over or under charge so
that the amount charged to ex-
penSes represents the actual amount
due for payment during the sue
ceeding year.
Consumer Hit, Is Claim
The sum of $525,000 paid the
holding company for dividends was
paid for by the ultimate consumer,
utility experts assert. And the re
serve for depreciation fund actually
belongs to the consumers, it was as
serted, when it comes to a question
of a possible rate reduction in these
parlous times.
Accountants assert that the light
company made a practice of charg-
ing income taxes" TO operating ex-
penses. included under the heading
of taxes. These amounts they al
lege we're not paid, so in succeeding
years the sum finally was closed to
the credit of surplus account" ac-
countants pointed out, to illustrate
the above alleged transaction.
Table Is Published
Following is a table taken from
reports of the light company to the
public service commission showing
Income tax accrued" Accountants
expressed wonder that the figures
should always show up in round
numbers.
1927. s6s.Oo0; 1928. $4,000; 1929
So, 1000; 1880. $4,000; 1881. $780,
900; 1892 $4,000. Total, S775,0Oo.
According TO an analysis, in the
possession of Mr.. Minton. from re-
ports of the light company to the
public service commission, the
amount of income taxes charged to
operating expenses and not paid
amounted to $685., 20319 covering the
period from 1927 to 1892, inclusive
Utility experts point out that
corporation taxes during the period
were 1914 to Is per cent. There
fore. they assert. the excess deduc-
tons not allowed by the income tax
department must have been more
than 81 600 600.