Sec. 36.412  Apportionment procedures.

    (a) For apportionment purposes, the expenses in this account are 
segregated into two groups as follows: (1) Operating Federal, State and 
local income taxes and (2) all other operating taxes.
    (b) Operating Federal, State and local income taxes are apportioned 
among the operations on the basis of the approximate net taxable income 
(positive or negative) applicable to each of the operations. The 
approximate net taxable income from each of the operations is the 
summation of the following amounts apportioned to each operation by 
means of the procedures set forth in this Manual:
    (1) Operating revenues,
    (2) Less operating expenses,
    (3) Less operating taxes except the net income tax being apportioned 
and except any other tax not treated as a deductible item in the 
determination of taxable net income for this purpose.
    (4) Less operating fixed charges.
    (i) The amount of fixed charges attributable to the operations is 
obtained by subtracting the tax component (positive or negative) 
attributable to other than the operating fixed charges, i.e., fixed 
charges on non-operating investments are that proportion of total fixed 
charges which non-operating net investments are of total operating and 
non-operating net investments.
    (ii) Operating fixed charges including interest on Rural Telephone 
Bank Stock are apportioned among the operations on the basis of the 
separation of the cost of telephone plant less appropriate reserves.
    (c) Other operating taxes should be directly assigned to the 
appropriate jurisdiction where possible, e.g., Local Gross Receipts may 
be directly identified as applicable to one jurisdiction. Where direct 
assignment is not feasible, these expenses should be apportioned among 
the operations on the basis of the separation of the cost of 
Telecommunications Plant in Service--Account 2001.

                          Equal Access Expenses