Rev. Rul. 86-40

1986-1 C.B. 241, 1986-12 I.R.B. 5.

LIFO; PRICE INDEXES; DEPARTMENT STORES

Published: March 24, 1986

Section 472.-Last-in, First-out Inventories, 26 CFR 1.472-1: Last-in, first-out inventories

  LIFO; price indexes; department stores. The December 1985 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, December 31, 1985.

  The following price indexes for December 1985 were issued by the Bureau of Labor Statistics on January 24, 1986, for use by department stores, and are accepted by the Internal Revenue Service, under section 1.472-1(k) of the Income Tax Regulations and Rev. Proc. 72- 21, 1972-1 C.B. 745, for appropriate application to inventories of department stores employing the retail inventory and last-in, first- our inventory methods for tax years ended on, or with reference to, December 31, 1985.

  Indexes are prepared on a national basis for the store total, for 20 major groups of departments, and for two special combinations-soft and durable goods. The store total index covers all departments, including some not listed separately, with the following exceptions: candy, foods, liquor, tobacco, paints, and wallpaper, as well as contract departments.

                 BUREAU OF LABOR STATISTICS, DEPARTMENT STORE
                 INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS
                             (January 1941 = 100)
                                                                    Percentage
                                                                   Change from
                                          December     December      December
                                                                     1984 to
                                            1984         1985        December
                                                                    1985 [FN1]
-------------------------------------------------------------------------------
      I.  Piece Goods ..................... 399.1        404.4              1.3
     II.  Domestics and Draperies ......... 546.0        541.5             -0.8
    III.  Women's and Children's Shoes .... 553.5        549.4             -0.8
     IV.  Men's Shoes ..................... 704.8        727.0              3.1
      V.  Infants' Wear ................... 483.8        500.4              3.4
     VI.  Women's Underwear ............... 425.3        441.7              3.9
    VII.  Women's and Girl's Hosiery ...... 235.1        238.6              1.5
   VIII.  Women's and Girl's
            Accessories ................... 450.0        452.6              0.6
     IX.  Women's Outerwear and Girl's
            Wear .......................... 343.0        351.8              2.6
      X.  Men's Clothing .................. 467.6        477.6              2.1
     XI.  Men's Furnishings ............... 472.1        488.5              3.5
    XII.  Boys' Clothing and
            Furnishings ................... 443.6        451.2              1.7
   XIII.  Jewelry ......................... 677.9        665.2             -1.9
    XIV.  Notions ......................... 485.7        488.5              0.6
     XV.  Toilet Articles and Drugs ....... 625.9        647.8              3.5
    XVI.  Furniture and Bedding ........... 530.2        540.7              2.0
   XVII.  Floor Coverings ................. 459.6        456.7             -0.6
  XVIII.  Housewares ...................... 707.4        717.3              1.4
    XIX.  Major Appliances ................ 240.6        243.5              1.2
     XX.  Radio and Television ............ 107.2        100.5             -6.3
          Groups I-XV: Soft Goods ......... 473.8        482.1              1.8
          Groups XVI-XX: Durable Goods .... 442.2        445.4              0.7
          Store Total ..................... 464.7        471.8              1.5
FN1. Absence of a minus sign before percentage change in this column signifies
  price increase.

Rev. Rul. 86-40, 1986-1 C.B. 241, 1986-12 I.R.B. 5.