IRS Revenue Ruling
1998-35

Code Sec. 472

<<FULL TEXT>>

26 CFR 1.472-1: Last-in, first-out inventories.

LIFO; price indexes; department stores. The May 1998 Bureau of Labor
Statistics price indexes are accepted for use by department stores
employing the retail inventory and last-in, first-out inventory methods
for valuing inventories for tax years ended on, or with reference to, May
31, 1998.


REV. RUL. 98-35

The following Department Store Inventory Price Indexes for May 1998
were issued by the Bureau of Labor Statistics. The indexes are accepted by
the Internal Revenue Service, under section 1.472-1(k) of the Income Tax
Regulations and Rev. Proc. 86-46, 1986-2 C.B. 739, for appropriate
application to inventories of department stores employing the retail
inventory and last-in, first-out inventory methods for tax years ended on,
or with reference to, May 31, 1998.

The Department Store Inventory Price Indexes are prepared on a national
basis and include (a) 23 major groups of departments, (b) three special
combinations of the major groups -- soft goods, durable goods, and
miscellaneous goods, and (c) a store total, which covers all departments,
including some not listed separately, except for the following: candy,
food, liquor, tobacco, and contract departments.

BUREAU OF LABOR STATISTICS, DEPARTMENT
STORE INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100,
unless otherwise noted)

Percent
Change from
May May May 1997 to
Groups 1997 1998 May 1998 <1>
------ ---- ---- ------------
1. Piece Goods 529.2 534.6 1.0
2. Domestics and Draperies 649.3 637.0 -1.9
3. Women's and Children's Shoes 663.7 664.2 0.1
4. Men's Shoes 918.8 907.9 -1.2
5. Infants' Wear 642.0 629.1 -2.0
6. Women's Underwear 537.7 576.1 7.1
7. Women's Hosiery 296.7 306.1 3.2
8. Women's and Girls' Accessories 566.2 546.5 -3.5
9. Women's Outerwear and Girls' Wear 435.1 425.4 -2.2
10. Men's Clothing 630.2 634.5 0.7
11. Men's Furnishings 601.9 608.6 1.1
12. Boys' Clothing and Furnishings 500.2 497.9 -0.5
13. Jewelry 1004.9 986.2 -1.9
14. Notions 755.8 786.5 4.1
15. Toilet Articles and Drugs 907.2 951.0 4.8
16. Furniture and Bedding 673.4 682.1 1.3
17. Floor Coverings 592.7 602.7 1.7
18. Housewares 806.3 814.2 1.0
19. Major Appliances 242.0 238.5 -1.4
20. Radio and Television 76.7 72.1 -6.0
21. Recreation and Education <2> 109.8 105.1 -4.3
22. Home Improvements <2> 132.4 134.3 1.4
23. Auto Accessories <2> 107.2 106.6 -0.6

Groups 1-15: Soft Goods 612.3 612.0 0.0
Groups 16-20: Durable Goods 465.4 462.5 -0.6
Groups 21-23: Misc. Goods <2> 112.2 109.1 -2.8

Store Total <3> 560.7 557.9 -0.5

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1/ Absence of a minus sign before percentage change in this column
signifies price increase.
2/ Indexes on a January 1986 = 100 base.
3/ The store total index covers all departments, including some not
listed separately, except for the following: candy, foods, liquor,
tobacco, and contract departments.


DRAFTING INFORMATION

The principal author of this revenue ruling is Stan Michaels of the
Office of Assistant Chief Counsel (Income Tax and Accounting). For further
information regarding this revenue ruling, contact Mr. Michaels on (202)
622-4970 (not a toll-free call).

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