Rev. Rul. 87-46

1987-1 C.B. 155, 1987-24 I.R.B. 10.

LIFO; PRICE INDEXES; DEPARTMENT STORES

Published: June 15, 1987

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

  LIFO; price indexes; department stores. The January 1987 Bureau of Labor Statistics price indexes are accepted for use by department stores employing the retail inventory and last-in, firs-out inventory methods for valuing inventories fo r tax years ended on, or with reference to, January 31, 1987.

  The following price indexes for January 1987 were issued by the Bureau of Labor Statistics on February 27, 1987, 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. 86-46, 1986-50 I.R.B. 6, 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, January 31, 1987.

  Indexes are prepared on a national basis for the store total, for 23 major groups of departments, and for three special combinations- soft goods, durable goods and miscellaneous goods. The store total index covers all departments, including some not listed separately, with the following exceptions: candy, foods, liquor, tobacco, as well as contract departments.

  The major groups of departments for which indexes are prepared have been expanded from 20 to 23. These new groups are: (1) Group 21 - - Recreation and Education; (2) Group 22 - Home Improvements; and (3) Group 23 - Auto Accessories. A Miscellaneous Goods index is also introduced to reflect the aggregate movement of these three new groups. See Rev. Proc. 86-46 which modifies and supersedes Rev. Proc. 72-21, 1972-1 C.B. 745.

  Rev. Proc. 86-47, 1986-50 I.R.B. 8, sets forth the procedures required of taxpayers to change their method of accounting from that of using the 20 groups set forth in Rev. Proc. 72-21 to the method of using the 23 groups set forth in Rev. Proc. 86-46.

    BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORY PRICE INDEXES BY

                               DEPARTMENT GROUPS
                  (January 1941 = 100 unless otherwise noted)
                                                                      Percent
                                                                    Change from
                                            January      January      January
                                                                      1986 to
                     Groups                  1986         1987        January
                                                                       1987
                                                                       [FN1]
    1.  Piece Goods ........................... 397.7        406.3          2.2
    2.  Domestics and Draperies ............... 532.9        550.5          3.3
    3.  Women's and Children's Shoes .......... 523.5        521.3         -0.4
    4.  Men's Shoes ........................... 724.2        741.0          2.3
    5.  Infants' Wear ......................... 529.0        520.1         -1.7
    6.  Women's Underwear ..................... 431.2        424.7         -1.5
    7.  Women's and Girls' Hoisery ............ 236.1        238.4          1.0
    8.  Women's and Girls' Accessories ........ 448.5        457.2          1.9
    9.  Women's Outerwear and Girls'
          Wear ................................ 332.0        338.2          1.9
   10.  Men's Clothing ........................ 469.1        476.6          1.6
   11.  Men's Furnishings ..................... 484.1        479.6         -0.9
   12.  Boys' Clothing and Furnishes .......... 437.9        434.7         -0.7
   13.  Jewelry ............................... 671.1        702.4          4.7
   14.  Notions ............................... 480.0        486.7          1.4
   15.  Toilet Articles and Drugs ............. 654.0        670.5          2.5
   16.  Furniture and Bedding ................. 541.5        550.6          1.7
   17.  Floor Coverings ....................... 461.7        467.7          1.3
   18.  Housewares ............................ 717.7        725.2          1.0
   19.  Major Appliances ...................... 246.0        247.9          0.8
   20.  Radio and Television .................. 100.7        100.6         -0.1
   21.  Recreation and Education .............. 100.0        100.9          0.9
   22.  Home Improvements ..................... 100.0        103.0          3.0
   23.  Auto Accessories ...................... 100.0        100.1          0.1
        Groups 1-15: Soft Goods ............... 473.6        479.9          1.3
        Groups 16-20: Durable Goods ........... 446.6        450.3          0.8
        Groups 21-23: Misc. Goods ............. 100.0        101.0          1.0
        Store Total ........................... 446.6        472.0          1.2
FN1. Absence of a minus sign before percentage change in this column signifies
  price increase

Rev. Rul. 87-46, 1987-1 C.B. 155, 1987-24 I.R.B. 10