Rev. Rul. 97-32 — Internal Revenue Bulletin 1997-33

The following Department Store Inven

Section 162.—Trade or Business Expenses

What procedures must a lawyer, handling cases on a contingent fee basis, use to obtain automatic consent of the Commissioner to change its method of accounting for advances paid to clients. See Rev. Proc. 97–37, page 18.

Section 165.—Losses

26 CFR 1.165–2: Obsolescence of nondepreciable property.

When may a taxpayer deduct a loss arising from the obsolescence of a package design. See Rev. Proc. 97–35, page 11.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 97–37, page 18.

Section 166.—Bad Debts

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change from the § 585 reserve method of accounting to the § 166 specific charge-off method. See Rev. Proc. 97–37, page 18.

Section 167.—Depreciation

26 CFR 1.167(a)–3: Intangibles.

How may a taxpayer recover the costs of creating a package design. See Rev. Proc. 97–35, page 11.

26 CFR 1.167(e)–1: Change in method.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for depreciation. See Rev. Proc. 97–37, page 18.

Section 168.—Accelerated Cost Recovery System

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for depreciation. See Rev. Proc. 97–37, page 18.

Section 197.—Amortization of Goodwill and Other Intangibles

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for amortization. See Rev. Proc. 97–37, page 18.

Section 263.—Capital Expenditures

26 CFR 1.263(a)–2: Examples of capital expenditures.

Must the costs of creating a package design be capitalized. See Rev. Proc. 97–35, page 11.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 97–37, page 18.

Section 263A.—Capitalization and Inclusion in Inventory Costs of Certain Expenses

26 CFR §1.263A–1: Uniform capitalization of costs.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 97–37, page 18.

26 CFR 1.263A–2: Rules relating to property pro- duced by the taxpayer.

Are the costs incurred in connection with the development and design of product packages subject to the rules under section 263A. See Rev. Proc. 97–35, page 11.

Section 401.—Qualified Pension, Profit-sharing, and Stock Bonus Plans.

26 CFR 1.401(b)–1: Certain retroactive changes in plan.

A procedure describes when plans that are qualified under § 401(a) or § 403(a) must be amended for the Small Business Job Protection Act of 1996, Pub. L. 104–188, the Uruguay Round Agreements Act, Pub. L. 103–465, and the Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L. 103–353. See Rev. Proc. 97–41, page 51.

Section 403.—Taxation of Employee Annuities

A procedure describes when tax-sheltered annuity plans within the meaning of § 403(b) must be amended for the Small Business Job Protection Act of 1996, Pub. L. 104–188. See Rev. Proc. 97–41, page 51.

Section 446.—General Rule for Methods of Accounting

26 CFR 1.446–1: General rule for methods of ac- counting.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for package design costs. See Rev. Proc. 97–35, page 11.

How may an automobile dealer change its method of accounting to use the Alternative LIFO Method. See Rev. Proc. 97–36, page 14.

Section 451.—General Rule for Taxable Year of Inclusion

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its

August 18, 1997 4 1997–33 I.R.B.

tory Price Indexes for June 1997 were issued by the Bureau of Labor Statistics on July 16, 1997. 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, 1997.

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, foods, 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 tollfree call).

What is the “Alternative LIFO Method.” See Rev. Proc. 97–36, page 14.

26 CFR §1.472–6: Change from LIFO inventory method;

26 CFR §1.472–8: Dollar value method of pricing LIFO inventories.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change from the LIFO method of accounting for all its LIFO inventory, or to change to an alternate LIFO inventory method. See Rev. Proc. 97–37, page 18.

Section 481.—Adjustments Required by Changes in Mehtods of Accounting

26 CFR 1.481–4: Adjustments taken into account with consent.

How is the section 481(a) adjustment taken into account when a taxpayer changes its method of accounting for package design costs. See Rev. Proc. 97–35, page 11.

26 CFR §1.481–1: Adjustments in general;

26 CFR §1.481–4: Adjustments taken into account with consent.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change a method of accounting. See Rev. Proc. 97–37, page 18.

Section 585.—Reserves for Losses on Loans of Banks

Section 1273.—Determination of Amount of Original Issue Discount

26 CFR §1.1273–1: Definition of OID;

26 CFR §1.1273–2: Determination of issue price and issue date.

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for certain de minimis original issue discount. See Rev. Proc. 97–37, page 18.

Section 1281.—Current Inclusion in Income of Discount on Certain Short-term Obligations

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting for interest income on short-term obligations, or for stated interest on short-term loans of cash method banks in the Eighth Circuit. See Rev. Proc. 97–37, page 18.

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORY PRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Percent Change Groups June June from June 1996 1996 1997 to June 19971

Piece Goods . . . . . . . . . . . . . . . . . . . . . . 551.1 541.0 -1.8
Domestics and Draperies . . . . . . . . . . . . 641.0 644.1 0.5
Women’s and Children’s Shoes . . . . . . . 649.3 651.0 0.3
Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . 895.4 904.0 1.0
Infants’ Wear. . . . . . . . . . . . . . . . . . . . . . 627.1 642.5 2.5
Women’s Underwear. . . . . . . . . . . . . . . . 535.4 539.3 0.7
Women’s Hosiery . . . . . . . . . . . . . . . . . . 288.0 295.7 2.7
Women’s and Girls’Accessories. . . . . . . 545.5 569.4 4.4
Women’s Outerwear and Girls’ Wear . . . 401.1 415.3 3.5
Men’s Clothing . . . . . . . . . . . . . . . . . . . . 612.2 625.0 2.1
Men’s Furnishings . . . . . . . . . . . . . . . . . 584.5 589.8 0.9
Boys’ Clothing and Furnishings . . . . . . . 485.7 494.5 1.8
Jewelry. . . . . . . . . . . . . . . . . . . . . . . . . 1011.5 1002.1 -0.9
Notions . . . . . . . . . . . . . . . . . . . . . . . . . . 774.1 752.1 -2.8
Toilet Articles and Drugs . . . . . . . . . . . . 877.8 913.5 4.1
Furniture and Bedding . . . . . . . . . . . . . . 673.6 673.2 -0.1
Floor Coverings . . . . . . . . . . . . . . . . . . . 576.4 592.4 2.8
Housewares. . . . . . . . . . . . . . . . . . . . . . . 808.7 808.1 -0.1
Major Appliances . . . . . . . . . . . . . . . . . . 245.5 243.5 -0.8
Radio and Television . . . . . . . . . . . . . . . . 79.3 76.2 -3.9
Recreation and Education2 . . . . . . . . . . . 112.8 109.5 -2.9
Home Improvements2 . . . . . . . . . . . . . 127.4 132.8 4.2
Auto Accessories2 . . . . . . . . . . . . . . . . . . 107.5 108.0 0.5

Groups 1 – 15: Soft Goods . . . . . . . . . . . . . 592.4 602.5 1.7

Groups 16 – 20: Durable Goods. . . . . . . . . . 469.7 465.9 -0.8

2 . . . . . . . . . . . 113.7 112.2 -1.3

Groups 21 – 23: Misc. Goods

Store Total3 . . . . . . . . . . . . . . . . . . . . . . . . . 550.3 554.8 0.8

1 Absence of a minus sign before percentage change in this column signifies price increase. 2 Indexes on a January 1986 = 100 base. 3 The store total index covers all departments, including some not listed separately, except for the following: candy, foods, liquor, tobacco, and contract departments.

1997–33 I.R.B. 5 August 18, 1997

Section 1363.—Effect of Election on Corporation

What procedures must a taxpayer use to obtain automatic consent of the Commissioner to change its method of accounting. See Rev. Proc. 97–37, page 18.

Section 1362.—Election; Revocation; Termination

26 CFR 1.1362–6: Elections and consents.

If a taxpayer files an S corporation election after the statutory date, but within 6 months of that statu

tory due date, may the taxpayer obtain relief under § 1362(b)(5) of the Internal Revenue Code without applying for a private letter ruling? See Rev. Proc. 97–40, page 50.

August 18, 1997 6 1997–33 I.R.B.