[Code of Federal Regulations]
[Title 47, Volume 3]
[Revised as of October 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 47CFR65.450]

[Page 359-360]
 
                       TITLE 47--TELECOMMUNICATION
 
        CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION (CONTINUED)
 
PART 65_INTERSTATE RATE OF RETURN PRESCRIPTION PROCEDURES AND METHODOLOGIES
--Table of Contents
 
                       Subpart C_Exchange Carriers
 
Sec. 65.450  Net income.

    (a) Net income shall consist of all revenues derived from the 
provision of interstate telecommunications services regulated by this 
Commission less expenses recognized by the Commission as necessary to 
the provision of these services. The calculation of expenses entering 
into the determination of net income shall include the interstate 
portion of plant specific operations (Accounts 6110-6441), plant 
nonspecific operations (Accounts 6510-6565), customer operations 
(Accounts 6610-6623), corporate operations (Accounts 6720-6790), other 
operating income and expense (Account 7100), and operating taxes 
(Accounts 7200-7250), except to the extent this Commission specifically 
provides to the contrary.
    (b) Gains and losses related to the disposition of plant in service 
items, shall be handled as follows:
    (1) Gains related to property sold to others and leased back under 
capital leases for use in telecommunications services shall be recorded 
in Account 4300, Other long-term liabilities and deferred credits, and 
credited to Account 6563, Amortization expense--tangible, over the 
amortization period established for the capital lease;
    (2) Gains or losses related to the disposition of land and other 
nondepreciable items recorded in Account 7100 (Other operating income 
and expense) shall be included in net income for ratemaking purposes, 
but adjusted to reflect the relative amount of time such property was 
used in regulated operations and included in the rate base; and
    (3) Proceeds related to the disposition of property depreciated on a 
group basis and used jointly in regulated and nonregulated activities, 
including sale-leaseback arrangements for property depreciated on a 
group basis, shall be credited to the related reserves and attributed to 
regulated and nonregulated in proportion to the accumulated regulated 
and nonregulated depreciation for that group.
    (c) Gains or losses related to the disposition of property that was 
never included in the rate base shall not be considered for ratemaking 
purposes.
    (d) Except for the allowance for funds used during construction, 
reasonable charitable deductions and interest related to customer 
deposits, the amounts recorded as nonoperating income and expenses and 
taxes (Accounts 7300 and 7400) and interest and related items (Account 
7500) and extraordinary items (Account 7600) shall not be included 
unless this Commission specifically determines that particular items

[[Page 360]]

recorded in those accounts shall be included.

[53 FR 1029, Jan. 15, 1988, as amended at 60 FR 12139, Mar. 6, 1995; 67 
FR 5702, Feb. 6, 2002; 69 FR 53652, Sept. 2, 2004]