Rev. Rul. 98-42, 1998-35 I.R.B. 5.

INTERNAL REVENUE SERVICE
Revenue Ruling

LIFO; PRICE INDEXES; DEPARTMENT STORES

Published: August 31, 1998

Section 472. - Last-in, First-out Inventories, 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.

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 § 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)

Groups June 1997/June 1998/Percent Change from June 1997 to June 1998 [Fn1]
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 [fn2] 109.5 104.8 -4.3
22. Home Improvements [fn2] 132.8 133.1 0.2
23. Auto Accessories [fn2] 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 [fn2] 112.2 108.9 -2.9
Store Total [fn3] 554.8 550.7 -0.7

FN1 Absence of a minus sign before percentage change in this column signifies price increase.
FN2 Indexes on a January 1986=100 base.
FN3 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).

Rev. Rul. 98-42, 1998-35 I.R.B. 5.