IRS Revenue Ruling
1998-42

 Code Sec. 472

<<FULL TEXT>>

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

LIFO; price indexes; department stores. The June 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, June
30, 1998.


REV. RUL. 98-42

The following Department Store Inventory Price Indexes for June 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, June 30, 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
June June June 1997 to
Groups 1997 1998 June 1998 <1>
------ ---- ---- -------------
1. Piece Goods 541.0 513.9 -5.0
2. Domestics and Draperies 644.1 618.6 -4.0
3. Women's and Children's Shoes 651.0 659.3 1.3
4. Men's Shoes 904.0 906.7 0.3
5. Infants' Wear 642.5 623.1 -3.0
6. Women's Underwear 539.3 567.7 5.3
7. Women's Hosiery 295.7 308.3 4.3
8. Women's and Girls' Accessories 569.4 536.2 -5.8
9. Women's Outerwear and Girls' Wear 415.3 410.0 -1.3
10. Men's Clothing 625.0 616.6 -1.3
11. Men's Furnishings 589.8 599.1 1.6
12. Boys' Clothing and Furnishings 494.5 494.6 0.0
13. Jewelry 1002.1 970.3 -3.2
14. Notions 752.1 776.0 3.2
15. Toilet Articles and Drugs 913.5 948.5 3.8
16. Furniture and Bedding 673.2 689.3 2.4
17. Floor Coverings 592.4 604.0 2.0
18. Housewares 808.1 818.6 1.3
19. Major Appliances 243.5 236.7 -2.8
20. Radio and Television 76.2 71.9 -5.6
21. Recreation and Education <2> 109.5 104.8 -4.3
22. Home Improvements <2> 132.8 133.1 0.2
23. Auto Accessories <2> 108.0 107.2 -0.7

Groups 1-15: Soft Goods 602.5 600.1 -0.4
Groups 16-20: Durable Goods 465.9 463.6 -0.5
Groups 21-23: Misc. Goods <2> 112.2 108.9 -2.9

Store Total <3> 554.8 550.7 -0.7

----------
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, food, 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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