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Revenue Ruling 2006-08 February 27, 2006

LIFO; Price Indexes; Department Stores.

LIFO; price indexes; department stores. The December 2005 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, 2005.

The following Department Store Inventory Price Indexes for December 2005 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, December 31, 2005.

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 Dec. 2004 Dec. 2005 Percent Change from Dec. 2004 to Dec. 20051
1. Piece Goods 495.2 467.2 -5.7
2. Domestics and Draperies 527.4 506.3 -4.0
3. Women’s and Children’s Shoes 650.7 659.5 1.4
4. Men’s Shoes 841.5 862.7 2.5
5. Infants’ Wear 577.4 568.5 -1.5
6. Women’s Underwear 517.2 547.0 5.8
7. Women’s Hosiery 339.2 337.9 -0.4
8. Women’s and Girls’ Accessories 565.6 558.5 -1.3
9. Women’s Outerwear and Girls’ Wear 352.5 350.8 -0.5
10. Men’s Clothing 535.8 527.4 -1.6
11. Men’s Furnishings 569.9 560.6 -1.6
12. Boys’ Clothing and Furnishings 414.2 394.0 -4.9
13. Jewelry 866.2 842.7 -2.7
14. Notions 792.2 801.0 1.1
15. Toilet Articles and Drugs 992.1 1000.7 0.9
16. Furniture and Bedding 602.0 602.9 0.1
17. Floor Coverings 592.5 614.5 3.7
18. Housewares 708.0 697.7 -1.5
19. Major Appliances 199.9 205.0 2.6
20. Radio and Television 40.3 37.7 -6.5
21. Recreation and Education2 78.3 77.4 -1.1
22. Home Improvements2 131.7 136.7 3.8
23. Automotive Accessories2 112.9 117.0 3.6
         
Groups 1-15: Soft Goods 552.5 548.0 -0.8
Groups 16-20: Durable Goods 378.5 375.7 -0.7
Groups 21-23: Misc. Goods2 92.2 93.0 0.9
       
  Store Total3 490.1 487.2 -0.6
         
1Absence of a minus sign before the percentage change in this column signifies a price increase.
2Indexes on a January 1986 = 100 base.
3The 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 Michael Burkom of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this revenue ruling, contact Mr. Burkom at (202) 622-7924 (not a toll-free call).

Internal Revenue Bulletin 2006-09

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