New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter I - Franchise and Certain Business Taxes
Subchapter F - Tax On The Furnishing Of Utility Services
Part 45 - Gross Income
Section 45.2 - Methods of accounting

(a) The statute imposes a tax upon the gross income for the period specified, as distinguished from a tax on receipts from sales made during the specified period, and may be construed to require a cash system of accounting and reporting. The accounting systems of utilities under the supervision of the State Department of Public Service are, it is understood, on the accrual basis. The State Tax Commission, therefore, will accept reports on either the cash or the accrual basis, according to the usual accounting system employed, providing such accounting system correctly reflects the true gross income of the reporting utility.

(b) A utility keeping its accounts on the cash basis shall include in gross income cash received by reason of any sale made or service rendered, all amounts allowed as credits against charges for sales made or services rendered, and credits allowed for property of any kind or nature.

(c) A utility keeping its accounts on the accrual basis shall include in gross income all receipts accrued on its books for the reporting period, but will be permitted to deduct such sums as represent, for example, uncollectible accounts, returned merchandise, etc., regardless of when the sales were made or services rendered, thus achieving substantially, if not exactly, the same results as would be attained by the cash system of accounting and reporting. If a utility, as an established practice, has made periodic charges to provide for uncollectible accounts, that practice may be continued, provided the charges are reasonable. In such event, a utility may not deduct an additional amount for uncollectible items.