
Year Ended December 31, 2020	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(138.2)	$	5.2	$	22.2	$	21.4	$	11.3	$	(26.6)	$	(11.4)	$	(13.6)
Deferred	146.9		(15.4)		65.4		(27.1)		(20.6)		74.0		8.3		19.6

Total Federal	8.7		(10.2)		87.6		(5.7)		(9.3)		47.4		(3.1)		6.0

State and Local:
Current	(16.7)		(0.1)		2.8		9.3		1.9		(5.4)		0.1		(8.2)
Deferred	48.5		(0.9)		16.3		0.7		(0.1)		3.2		8.2		11.6

Total State and Local	31.8		(1.0)		19.1		10.0		1.8		(2.2)		8.3		3.4

Income Tax Expense (Benefit)	$	40.5	$	(11.2)	$	106.7	$	4.3	$	(7.5)	$	45.2	$	5.2	$	9.4


Year Ended December 31, 2019	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(7.4)	$	(31.8)	$	23.7	$	36.7	$	48.1	$	(10.0)	$	25.5	$	6.9
Deferred	(71.6)		(24.7)		71.7		(126.1)		(57.1)		40.6		(26.0)		(10.0)

Total Federal	(79.0)		(56.5)		95.4		(89.4)		(9.0)		30.6		(0.5)		(3.1)

State and Local:
Current	4.4		2.9		2.4		12.0		(2.4)		1.1		0.2		0.8
Deferred	61.7		—		19.6		(0.6)		0.8		3.2		7.8		(2.4)

Total State and Local	66.1		2.9		22.0		11.4		(1.6)		4.3		8.0		(1.6)

Income Tax Expense (Benefit)	$	(12.9)	$	(53.6)	$	117.4	$	(78.0)	$	(10.6)	$	34.9	$	7.5	$	(4.7)


Year Ended December 31, 2018	AEP		AEP Texas		AEPTCo		APCo		I&M		OPCo		PSO		SWEPCo
	(in millions)
Federal:
Current	$	(31.7)	$	37.0	$	(14.2)	$	(31.9)	$	60.9	$	55.6	$	35.6	$	18.3
Deferred	122.0		(17.9)		82.3		(24.5)		(48.8)		(36.9)		(36.7)		(1.9)

Total Federal	90.3		19.1		68.1		(56.4)		12.1		18.7		(1.1)		16.4

State and Local:
Current	30.8		1.8		(0.6)		3.7		15.8		4.6		(0.2)		2.3
Deferred	(5.8)		(0.1)		16.6		7.8		1.2		0.7		6.3		1.7

Total State and Local	25.0		1.7		16.0		11.5		17.0		5.3		6.1		4.0

Income Tax Expense (Benefit)	$	115.3	$	20.8	$	84.1	$	(44.9)	$	29.1	$	24.0	$	5.0	$	20.4


AEP	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	2,196.7		$	1,919.8		$	1,931.3
Less: Equity Earnings – Dolet Hills	(2.9)			(3.0)			(2.7)
Income Tax Expense (Benefit)	40.5			(12.9)			115.3
Pretax Income	$	2,234.3		$	1,903.9		$	2,043.9

Income Taxes on Pretax Income at Statutory Rate (21%)	$	469.2		$	399.8		$	429.2
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	26.5			20.4			24.6

Investment Tax Credit Amortization	(18.8)			(13.0)			(20.4)
Production Tax Credits	(83.1)			(59.6)			(10.3)
State and Local Income Taxes, Net	25.1			52.2			19.7
Removal Costs	(18.6)			(22.2)			(18.6)
AFUDC	(32.5)			(37.1)			(29.4)


Tax Reform Adjustments	—			—			(10.9)

Tax Reform Excess ADIT Reversal	(268.2)			(353.2)			(257.2)


CARES Act	(48.0)			—			—
Other	(11.1)			(0.2)			(11.4)
Income Tax Expense (Benefit)	$	40.5		$	(12.9)		$	115.3

Effective Income Tax Rate	1.8		%	(0.7)		%	5.6		%


AEP Texas	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	241.0		$	178.3		$	211.3
Income Tax Expense (Benefit)	(11.2)			(53.6)			20.8
Pretax Income	$	229.8		$	124.7		$	232.1

Income Taxes on Pretax Income at Statutory Rate (21%)	$	48.3		$	26.2		$	48.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.0			1.0			0.7

Investment Tax Credit Amortization	(1.1)			(1.2)			(2.3)

State and Local Income Taxes, Net	(0.8)			2.3			1.3

AFUDC	(4.1)			(3.2)			(4.2)
Parent Company Loss Benefit	(4.5)			(3.8)			(3.0)

Tax Reform Adjustments	—			—			(11.0)

Tax Reform Excess ADIT Reversal	(47.9)			(73.4)			(11.8)



Other	(2.1)			(1.5)			2.4
Income Tax Expense (Benefit)	$	(11.2)		$	(53.6)		$	20.8

Effective Income Tax Rate	(4.9)		%	(43.0)		%	9.0		%


AEPTCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	423.4		$	439.7		$	315.9
Income Tax Expense	106.7			117.4			84.1
Pretax Income	$	530.1		$	557.1		$	400.0

Income Taxes on Pretax Income at Statutory Rate (21%)	$	111.3		$	117.0		$	84.0
Increase (Decrease) in Income Taxes Resulting from the Following Items:




State and Local Income Taxes, Net	15.1			17.4			12.6

AFUDC	(15.5)			(17.7)			(14.1)
Parent Company Loss Benefit	(7.0)			(4.2)			(0.6)







Other	2.8			4.9			2.2
Income Tax Expense	$	106.7		$	117.4		$	84.1

Effective Income Tax Rate	20.1		%	21.1		%	21.0		%


APCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	369.7		$	306.3		$	367.8
Income Tax Expense (Benefit)	4.3			(78.0)			(44.9)
Pretax Income	$	374.0		$	228.3		$	322.9

Income Taxes on Pretax Income at Statutory Rate (21%)	$	78.5		$	47.9		$	67.8
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	12.7			10.8			9.4



State and Local Income Taxes, Net	7.9			9.0			9.1
Removal Costs	(5.7)			(6.4)			(7.9)
AFUDC	(4.5)			(5.2)			(4.3)
Parent Company Loss Benefit	(6.2)			(4.1)			(3.6)



Tax Reform Excess ADIT Reversal	(72.3)			(130.4)			(108.5)

Federal Return to Provision	(7.2)			(1.0)			(6.6)

Other	1.1			1.4			(0.3)
Income Tax Expense (Benefit)	$	4.3		$	(78.0)		$	(44.9)

Effective Income Tax Rate	1.1		%	(34.2)		%	(13.9)		%


I&M	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	284.8		$	269.4		$	261.3
Income Tax Expense (Benefit)	(7.5)			(10.6)			29.1
Pretax Income	$	277.3		$	258.8		$	290.4

Income Taxes on Pretax Income at Statutory Rate (21%)	$	58.2		$	54.3		$	61.0
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.6			4.0			1.5

Investment Tax Credit Amortization	(4.5)			(3.6)			(4.7)

State and Local Income Taxes, Net	1.5			(1.2)			13.4
Removal Costs	(10.5)			(12.8)			(8.0)
AFUDC	(2.4)			(4.1)			(2.5)
Parent Company Loss Benefit	(6.4)			(3.3)			(2.3)



Tax Reform Excess ADIT Reversal	(46.8)			(42.5)			(25.8)

Federal Return to Provision	1.9			(0.3)			(4.6)

Other	(0.1)			(1.1)			1.1
Income Tax Expense (Benefit)	$	(7.5)		$	(10.6)		$	29.1

Effective Income Tax Rate	(2.7)		%	(4.1)		%	10.0		%


OPCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	271.4		$	297.1		$	325.5
Income Tax Expense	45.2			34.9			24.0
Pretax Income	$	316.6		$	332.0		$	349.5

Income Taxes on Pretax Income at Statutory Rate (21%)	$	66.5		$	69.7		$	73.4
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	3.7			(1.4)			2.4



State and Local Income Taxes, Net	(1.7)			3.4			4.2

AFUDC	(2.6)			(3.8)			(2.1)
Parent Company Loss Benefit	—			(1.8)			(6.0)



Tax Reform Excess ADIT Reversal	(27.2)			(27.3)			(51.0)

Federal Return to Provision	6.5			(3.7)			0.2

Other	—			(0.2)			2.9
Income Tax Expense	$	45.2		$	34.9		$	24.0

Effective Income Tax Rate	14.3		%	10.5		%	6.9		%


PSO	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	123.0		$	137.6		$	83.2
Income Tax Expense	5.2			7.5			5.0
Pretax Income	$	128.2		$	145.1		$	88.2

Income Taxes on Pretax Income at Statutory Rate (21%)	$	26.9		$	30.5		$	18.5
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.1			0.6			0.7

Investment Tax Credit Amortization	(2.1)			(0.5)			(1.7)

State and Local Income Taxes, Net	6.5			6.3			4.8


Parent Company Loss Benefit	(0.2)			(2.1)			(1.4)



Tax Reform Excess ADIT Reversal	(25.5)			(24.5)			(15.5)



Other	(1.5)			(2.8)			(0.4)
Income Tax Expense	$	5.2		$	7.5		$	5.0

Effective Income Tax Rate	4.1		%	5.2		%	5.7		%


SWEPCo	Years Ended December 31,
	2020			2019			2018
	(in millions)
Net Income	$	183.7		$	162.2		$	152.2
Less: Equity Earnings – Dolet Hills	(2.9)			(3.0)			(2.7)
Income Tax Expense (Benefit)	9.4			(4.7)			20.4
Pretax Income	$	190.2		$	154.5		$	169.9

Income Taxes on Pretax Income at Statutory Rate (21%)	$	39.9		$	32.4		$	35.7
Increase (Decrease) in Income Taxes Resulting from the Following Items:
Depreciation	1.9			1.9			1.9
Depletion	(3.4)			(3.4)			(3.4)


State and Local Income Taxes, Net	2.7			(1.3)			3.2

AFUDC	(1.5)			(1.4)			(1.3)
Parent Company Loss Benefit	(5.6)			(1.6)			(0.6)



Tax Reform Excess ADIT Reversal	(21.9)			(29.9)			(16.0)



Other	(2.7)			(1.4)			0.9
Income Tax Expense (Benefit)	$	9.4		$	(4.7)		$	20.4

Effective Income Tax Rate	4.9		%	(3.0)		%	12.0		%


AEP	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	3,259.7	$	3,246.1
Deferred Tax Liabilities	(11,500.6)		(10,834.3)
Net Deferred Tax Liabilities	$	(8,240.9)	$	(7,588.2)

Property Related Temporary Differences	$	(7,340.5)	$	(6,602.9)
Amounts Due to Customers for Future Income Taxes	1,075.8		1,173.5
Deferred State Income Taxes	(1,317.6)		(1,198.0)

Securitized Assets	(140.0)		(178.7)

Regulatory Assets	(391.6)		(371.1)

Accrued Nuclear Decommissioning	(626.4)		(557.4)
Net Operating Loss Carryforward	112.9		77.6
Tax Credit Carryforward	323.6		247.2
Operating Lease Liability	183.7		182.6
Investment in Partnership	(362.0)		(446.6)




All Other, Net	241.2		85.6
Net Deferred Tax Liabilities	$	(8,240.9)	$	(7,588.2)


AEP Texas	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	183.6	$	220.0
Deferred Tax Liabilities	(1,200.3)		(1,185.4)
Net Deferred Tax Liabilities	$	(1,016.7)	$	(965.4)

Property Related Temporary Differences	$	(1,039.6)	$	(973.5)
Amounts Due to Customers for Future Income Taxes	114.4		126.7
Deferred State Income Taxes	(29.1)		(27.5)


Securitized Transition Assets	(90.2)		(124.3)
Regulatory Assets	(47.4)		(51.2)




Operating Lease Liability	18.0		17.2





All Other, Net	57.2		67.2
Net Deferred Tax Liabilities	$	(1,016.7)	$	(965.4)


AEPTCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	166.5	$	162.9
Deferred Tax Liabilities	(1,073.4)		(980.7)
Net Deferred Tax Liabilities	$	(906.9)	$	(817.8)

Property Related Temporary Differences	$	(937.8)	$	(847.1)
Amounts Due to Customers for Future Income Taxes	118.9		119.9
Deferred State Income Taxes	(98.3)		(86.1)






Net Operating Loss Carryforward	13.2		12.3







All Other, Net	(2.9)		(16.8)
Net Deferred Tax Liabilities	$	(906.9)	$	(817.8)


APCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	500.6	$	486.2
Deferred Tax Liabilities	(2,250.5)		(2,167.0)
Net Deferred Tax Liabilities	$	(1,749.9)	$	(1,680.8)

Property Related Temporary Differences	$	(1,412.0)	$	(1,420.0)
Amounts Due to Customers for Future Income Taxes	198.3		222.8
Deferred State Income Taxes	(336.5)		(337.2)

Securitized Assets	(44.7)		(49.3)

Regulatory Assets	(114.8)		(71.0)




Operating Lease Liability	16.7		16.5





All Other, Net	(56.9)		(42.6)
Net Deferred Tax Liabilities	$	(1,749.9)	$	(1,680.8)


I&M	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	989.5	$	970.5
Deferred Tax Liabilities	(2,053.9)		(1,950.2)
Net Deferred Tax Liabilities	$	(1,064.4)	$	(979.7)

Property Related Temporary Differences	$	(409.2)	$	(430.7)
Amounts Due to Customers for Future Income Taxes	147.9		169.6
Deferred State Income Taxes	(211.1)		(194.4)



Regulatory Assets	(16.5)		(26.9)

Accrued Nuclear Decommissioning	(626.4)		(557.4)


Operating Lease Liability	46.6		61.9





All Other, Net	4.3		(1.8)
Net Deferred Tax Liabilities	$	(1,064.4)	$	(979.7)


OPCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	210.8	$	202.3
Deferred Tax Liabilities	(1,165.9)		(1,051.6)
Net Deferred Tax Liabilities	$	(955.1)	$	(849.3)

Property Related Temporary Differences	$	(1,016.0)	$	(890.8)
Amounts Due to Customers for Future Income Taxes	121.1		130.2
Deferred State Income Taxes	(40.7)		(35.5)



Regulatory Assets	(53.7)		(48.0)




Operating Lease Liability	19.4		18.3





All Other, Net	14.8		(23.5)
Net Deferred Tax Liabilities	$	(955.1)	$	(849.3)


PSO	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	239.8	$	257.4
Deferred Tax Liabilities	(928.3)		(885.7)
Net Deferred Tax Liabilities	$	(688.5)	$	(628.3)

Property Related Temporary Differences	$	(661.8)	$	(627.6)
Amounts Due to Customers for Future Income Taxes	118.5		127.2
Deferred State Income Taxes	(107.7)		(100.4)



Regulatory Assets	(39.1)		(44.6)


Net Operating Loss Carryforward	12.9		10.2







All Other, Net	(11.3)		6.9
Net Deferred Tax Liabilities	$	(688.5)	$	(628.3)


SWEPCo	December 31,
	2020		2019
	(in millions)
Deferred Tax Assets	$	338.1	$	359.6
Deferred Tax Liabilities	(1,355.7)		(1,300.5)
Net Deferred Tax Liabilities	$	(1,017.6)	$	(940.9)

Property Related Temporary Differences	$	(985.1)	$	(947.6)
Amounts Due to Customers for Future Income Taxes	162.7		169.8
Deferred State Income Taxes	(214.7)		(200.3)



Regulatory Assets	(26.2)		(30.2)


Net Operating Loss Carryforward	33.4		38.2







All Other, Net	12.3		29.2
Net Deferred Tax Liabilities	$	(1,017.6)	$	(940.9)

AEP and subsidiaries join in the filing of a consolidated federal income tax return. The allocation of the AEP System’s current consolidated federal income tax to the AEP System companies allocates the benefit of current tax loss of the parent company (Parent Company Loss Benefit) to the AEP System subsidiaries with taxable income reducing their current tax expense proportionately. The consolidated NOL of the AEP System is allocated to each company in the consolidated group with taxable losses. With the exception of the allocation of the consolidated AEP System NOL, the loss of the Parent and tax credits, the method of allocation reflects a separate return result for each company in the consolidated group.

The statute of limitations for the IRS to examine AEP and subsidiaries originally filed federal return has expired for tax years 2016 and earlier. In the third quarter of 2019, AEP and subsidiaries elected to amend the 2014 and 2015 federal returns. In the first quarter of 2020, the IRS notified AEP that it was beginning an examination of these amended returns, including the NOL carryback to 2015 that originated in the 2017 return. As of December 31, 2020, the IRS has not challenged any items on these returns and the IRS is limited in their proposed adjustments to the amount AEP claimed on the amended returns.


		State Net Income
		Tax Operating Loss		Years of
Company	State/Municipality	Carryforward		Expiration
		(in millions)
AEP	Arkansas	$	87.2	2021	-	2028
AEP	Kentucky	163.7		2030	-	2037
AEP	Louisiana	466.8		2025	-	2040
AEP	Oklahoma	569.4		2034	-	2037
AEP	Tennessee	31.1		2028	-	2035
AEP	Virginia	29.4		2025	-	2037
AEP	West Virginia	21.9		2029	-	2037
AEP	Ohio Municipal	649.8		2021	-	2025
AEP	Indiana	145.7		2039
AEP	Colorado	95.7		NA
AEP	Pennsylvania	56.5		2030	-	2040
AEP	New Jersey	60.2		2036	-	2040
AEP	Illinois	15.6		2031
AEP	Michigan	14.9		2029
AEPTCo	Oklahoma	195.4		2034	-	2037
AEPTCo	Ohio Municipal	18.4		2023
I&M	West Virginia	2.5		2032	-	2037
PSO	Oklahoma	354.5		2034	-	2037
SWEPCo	Arkansas	86.4		2021	-	2024
SWEPCo	Louisiana	454.3		2032	-	2037

As of December 31, 2020, AEP recorded a valuation allowance of $9 million, against certain state and municipal net income tax operating loss carryforwards since future taxable income is not expected to be sufficient to realize the remaining state net income tax operating loss tax benefits before the carryforward expires. Management anticipates future taxable income will be sufficient to realize the remaining state net income tax operating loss tax benefits before the carryforward expires for each state.

Federal and state net income tax operating losses sustained in 2016, 2017 and 2019 resulted in unused federal and state income tax credits. As of December 31, 2020, the Registrants have federal tax credit carryforwards and AEP and PSO have state tax credit carryforwards as indicated in the table below. If these credits are not utilized, federal general business tax credits will expire in the years 2036 through 2040 and state tax credits will remain available indefinitely.



	Total Federal		Total State
	Tax Credit		Tax Credit
Company	Carryforward		Carryforward
	(in millions)
AEP	$	323.6	$	38.4
AEP Texas	1.2		—
AEPTCo	0.1		—
APCo	1.6		—
I&M	9.7		—
OPCo	0.5		—
PSO	0.5		38.4
SWEPCo	1.3		—

AEP assesses the available positive and negative evidence to estimate whether sufficient future taxable income of the appropriate tax character will be generated to realize the benefits of existing deferred tax assets. When the evaluation of the evidence indicates that AEP will not be able to realize the benefits of existing deferred tax assets, a valuation allowance is recorded to reduce existing deferred tax assets to the net realizable amount. Objective evidence evaluated includes whether AEP has a history of recognizing income, future reversals of existing temporary differences and tax planning strategies.

The reconciliations of the beginning and ending amounts of unrecognized tax benefits for AEP are presented below. The amount and activity of unrecognized tax benefits for Registrants Subsidiaries was immaterial for periods presented:


	AEP
	2020		2019		2018
	(in millions)
Balance as of January 1,	$	24.1	$	14.6	$	86.6
Increase – Tax Positions Taken During a Prior Period	0.6		8.8		0.1
Decrease – Tax Positions Taken During a Prior Period	(14.5)		(2.1)		—
Increase – Tax Positions Taken During the Current Year	3.0		2.8		—
Decrease – Tax Positions Taken During the Current Year	—		—		—

Decrease – Settlements with Taxing Authorities	—		—		(71.0)
Decrease – Lapse of the Applicable Statute of Limitations	—		—		(1.1)
Balance as of December 31,	$	13.2	$	24.1	$	14.6

Management believes that there will be no significant net increase or decrease in unrecognized benefits within 12 months of the reporting date. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate for AEP as of December 31, 2020, 2019 and 2018 were $12 million, $20 million and $12 million, respectively.

In March 2020, the CARES Act was signed into law. The CARES Act includes tax relief provisions such as: (a) an AMT Credit Refund, (b) a 5-year NOL carryback from years 2018-2020 and (c) delayed payment of employer payroll taxes. Pursuant to the CARES Act, AEP, APCo and OPCo requested and in July received refunds of AMT credit of $20 million, $7 million and $9 million, respectively. In the third quarter of 2020, AEP also requested a $95 million refund of taxes paid in 2014 under the 5-year NOL carryback provision of the CARES Act. AEP carried back a NOL generated on the 2019 Federal income tax return at a 21% federal corporate income tax rate to the 2014 Federal income tax return at a 35% corporate income tax rate. As a result of the change in the corporate income tax rates between the two periods, AEP realized a tax benefit of $48 million primarily at the Generation & Marketing segment. Management will continue to monitor potential legislation and any impacts to the AMT Credit and NOL refunds that were filed in 2020 pursuant to the CARES Act.

In December 2020, the CAA of 2021 was signed into law. The CAA of 2021 includes: (a) COVID-19 tax relief and tax extender provisions including extensions of time to begin construction on and placed in-service assets generating PTCs and ITCs, (b) 100% deductibility of business meals in 2021 and 2022 and (c) an extension of the work opportunity tax credit. The ITC percentage has been increased for projects starting construction through 2023 and placed in-service by the end of 2025. The PTC has been extended for an additional year, to include projects started in 2021 and completed in 2025. These provisions provide time and flexibility on the construction start and in-service dates.

In September and November 2020, the IRS issued final regulations that provide guidance regarding the additional first-year depreciation deduction under Section 168(k). The final regulations reflect changes as a result of Tax Reform, which affects taxpayers with qualified depreciable property acquired and placed in-service after September 27, 2017. Generally, AEP’s regulated utilities will not be eligible for any bonus depreciation for property acquired and placed in-service after December 31, 2017. AEP’s competitive businesses will be eligible for 100% expensing.

The IRS issued final regulations in 2020 that provide guidance concerning potential limitations on the deduction of business interest expense. These regulations require an allocation of net interest expense between regulated and competitive businesses within the consolidated tax return. This allocation is based upon net tax basis, and the proposed regulations provide de minimis tests under which all interest is deductible if less than 10% is allocable to the competitive businesses. AEP will deduct materially all business interest expense under this de minimis provision.

On December 30, 2020, the IRS issued regulations that provide guidance on the non-deductibility of certain executives compensation above $1 million under Internal Revenue Code Section 162(m). The regulations clarify the application of rules passed under Tax Reform that expanded the application of Section 162(m) to SEC registered companies that issue either public equity or debt. These rules also expanded the type of compensation and the number of executives subject to this deduction disallowance. AEP limits certain executives’ compensation to the $1 million limitation on its federal income tax return.