Internal Revenue Service
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Rev. Rul. 2001-35, 2001-29 I.R.B. 59

LIFO; PRICE INDEXES; DEPARTMENT STORES

Published: July 16, 2001

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

  LIFO; price indexes; department stores. The May 2001 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, 2001.

  The following Department Store Inventory Price Indexes for May 2001 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, May 31, 2001.

  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          May 2000    May 2001    Percent  
                                               Change  
                                              from May  
                                              2000 to  
                                              May 2001  
                                               [FN1]   

      1.  Piece Goods ......................                            501.7      491.2       -2.1
      2.  Domestics and Draperies ..........                       620.4      598.8       -3.5
      3.  Women's and Children's                              
          Shoes ..........................                                 642.2      653.9        1.8
      4.  Men's Shoes ......................                           923.1      889.7       -3.6
      5.  Infants' Wear ....................                           641.0      625.4       -2.4
      6.  Women's Underwear ................                      573.4      570.4       -0.5
      7.  Women's Hosiery ..................                         335.1      352.0        5.0
      8.  Women's and Girls'                                 
          Accessories ....................                              543.4      553.1        1.8
      9.  Women's Outerwear and                               
          Girls' Wear ....................                               401.5      394.6       -1.7
     10.  Men's Clothing ...................                          623.7      595.5       -4.5
     11.  Men's Furnishings ................                        636.3      619.2       -2.7
     12.  Boys' Clothing and                                 
          Furnishings ....................                              502.5      497.1       -1.1
     13.  Jewelry ..........................                           943.4      934.7       -0.9
     14.  Notions ..........................                           775.9      776.3        0.1
     15.  Toilet Articles and Drugs ........                      971.1      947.8       -2.4
     16.  Furniture and Bedding ............                      672.5      641.8       -4.6
     17.  Floor Coverings ..................                         608.6      623.7        2.5
     18.  Housewares .......................                        779.4      767.1       -1.6
     19.  Major Appliances .................                        233.7      224.3       -4.0
     20.  Radio and Television ..............                         60.1      54.7       -9.0
     21.  Recreation and Education                             
          [FN2] ...........................                                 93.9      90.2       -3.9
     22.  Home Improvements [FN2] ..........                  128.5      125.7       -2.2
     23.  Auto Accessories [FN2] ...........                     106.5      108.9        2.3
                                                     
Groups 1 - 15: Soft Goods ....................                   604.5      594.0       -1.7
                                                     
Groups 16 - 20: Durable Goods ................                  438.3      423.0       -3.5
                                                     
Groups 21 - 23: Misc. Goods [FN2] ............                   100.9      98.6       -2.3
                                                     
Store Total [FN3] ............................                        542.5      530.8       -2.2
FN1. Absence of a minus sign before the percentage change in this column     
  signifies a 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 Alan J. Tomsic of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Tomsic at (202) 622- 4970 (not a toll-free call)