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V m shown as iton 4, col*(3)* on the attached statement is due to the former including depreciation accrued only since January 1, 1943 when I.C.C. depreciation accounting be­came effective, whereas the BIR depreciation is not only accrued at different rates, but also includes an element representing depreciation of 30$ of the value of the property at January 1, 1943 for past accrued depreciation* This element of 30$ was agreed to with BIR at the time UPRR Co. changed from retirement to depreciation accounting for Income tax purposes. The gross book investment of the LVL&W Co. facilities is the same as that used for income tax purposes and the depre­ciation and amortization figure is within |6,335.9d of being the same. In regard to the final paragraph of Mr. Rouse’s let­ters If LVL&W Co. property, other than the Las Vegas water facilities, is ultimately transferred to other companies, I concur in the suggestion that an inventory thereof be taken in order to definitely determine that the property recorded on the books is presently in existence. This inventory can readily be taken by conforming the procedure to that which was followed when inventorying Utah Parks Company facilities in 194$ prepara­tory to executing its new contract with United States Govern­ment. In connection with this subject, under date of July 19, 1942 Mr. Ashby advised Mr. Hulsizer that on that date the transfer of LA&SLRR Co. water facilities to LVL&W Co. was dis­cussed at Los Angeles with Messrs. Charske, Strong, Bennett, and Mann, following which the conclusion was reached that any change in the existing status was not justifiable at that time. With respect to Mr. Rouse’s letter of October 20, 1952: There would be no objection from an accounting standpoint, nor disadvantage from a federal income tax standpoint, if the LA&SL acquired the LVL&W property, other than the Las Vegas water sys­tem, at book cost, instead of the Union Land Company. Enel. R. M. SUTTON RMS