P a rt I. Rulings — Internal Revenue Bulletin 1997-42

Some commentators stated that the provision in the proposed regulations that all available comparable units (not just the “next available” unit) must be rented to qualified residents to continue treating an over-income unit as a low-income unit is inconsistent with the title of section 42(g)(2)(D)(ii). Although the title of that provision uses the term next available unit, the text of the rule provides that if any available comparable unit is occupied by a nonqualified resident, the over- i ncome unit ceases to be treated as a low-income unit. This means that if a building has more than one over-income unit, renting any available comparable unit (a comparably sized or smaller unit) to a qualified resident preserves the status of all

v e r-income units as low-income units. S i m i l a r l y, if any available comparable unit is rented to a nonqualified resident, all over-income units for which the available unit was a comparable unit lose their status as low-income units; thus, comparably sized or larger over-income units would lose their status as low-income units. In operation, this means that the owner must continue to rent any available comparable unit to a qualified resident until the percentage of low-income units in a building (excluding the over-income units) is equal to the percentage of low-income units on which the credit is based. At that point, failure to maintain the overincome units as low-income units has no immediate significance. (However, the failure to maintain an over-income unit as a low-income unit may affect the owner’s decision of whether or not to rent a particular available unit at market rate at a later time.) Consequently, the final regulations provide that all available comparable units in the building, not only the next available comparable unit, must be rented to qualified residents to retain the low-income status of the over-income units.

Application of Rules on a Building by Building Basis

The proposed regulations provide that in a project containing more than one low-income building, the available unit rule applies separately to each building. Some commentators suggested that the regulations should permit residents of

v e r-income units to move to available

Section 42.—Low-Income Housing Credit

26 CFR 1.42–15: Available unit rule.

T.D. 8732

D E PA RTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

Available Unit Rule

A G E N C Y: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

S U M M A RY: This document contains final regulations concerning the treatment of low-income housing units in a building that are occupied by individuals whose incomes increase above 140 percent of the income limitation applicable under section 42(g)(1). These regulations aff e c t owners of those buildings who claim the low-income housing tax credit.

D ATES: These regulations are eff e c t i v e September 26, 1997.

For dates of applicability of these regulations, see §1.42–15(i).

FOR FURTHER INFORMATION CONTACT: David Selig, (202) 622-3040 (not a toll-free number).

SUPPLEMENTARYINFORMATION:

Background

On May 30, 1996, the IRS published a notice of proposed rulemaking in the Fed- eral Register (PS–29–95 at 61 FR 27036

[1997–1 C.B. 862]) proposing amendments to the Income Tax Regulations (26 CFR part 1) under section 42(g)(2)(D) of the Internal Revenue Code. A p u b l i c hearing was scheduled for September 17, 1996, pursuant to a notice of public hearing published simultaneously with the notice of proposed rulemaking. However, the IRS received no requests to speak at the public hearing, and no public hearing was held. Written comments responding to the notice were received. After consideration of all the comments, the proposed regulations are adopted as revised by this Treasury decision.

Explanation of Revisions and Summary of Comments

The general rule in section 42(g)(2)(D)(i) provides that if the income of an occupant of a low-income unit increases above the income limitation applicable under section 42(g)(1), the unit continues to be treated as a low-income unit. This general rule only applies if the occupant’s income initially met the income limitation and the unit continues to be rent-restricted. Section 42(g)(2)(D)(ii), however, provides an exception to the general rule in section 42(g)(2)(D)(i). Under this exception, the unit ceases being treated as a low-income unit when two conditions occur. The first condition is that the occup a n t ’s income increases above 140 percent of the income limitation applicable under section 42(g)(1), or above 170 percent for a deep rent skewed project described in section 142(d)(4)(B) (applicable income limitation). When this occurs, the unit becomes an over-income unit. The second condition is that a new occupant, whose income exceeds the applicable income limitation (nonqualified resident), occupies any residential unit in the building of a comparable or smaller size (comparable unit).

Rules and Definitions

One commentator suggested that the available unit rule under the proposed regulations did not clearly indicate whether the aggregate income of all occupants of a unit is taken into account. Accordingly, the final regulations clarify that an over-income unit means a low-income unit in which the aggregate income of the occupants of the unit increases above 140 percent of the applicable income limitation under section 42(g)(1), or above 170 percent of the applicable income limitation for deep rent skewed projects described in section 142(d)(4)(B).

Commentators requested that the final regulations specify whether a comparable unit is measured by floor space or number of bedrooms. The final regulations provide that a comparable unit must be measured by the same method the taxpayer used to determine qualified basis for the credit year in which the comparable unit became available.

October 20 1997 4 1997–42 I R B

units in different buildings within the same low-income housing project without violating the available unit rule. However, because the requirements under section 42 must be satisfied on a building by building basis, the final regulations provide that the available unit rule only permits a current resident to move to another unit within the same building of a low-income housing project.

In addition, in response to requests from several commentators, the final regulations make clear that when a current resident moves to a different unit within the same low-income building, the units exchange status. (See example 2 of §1.42–15(g) of the proposed regulations and §1.42–15(h) of the final regulations.) Thus, the newly occupied unit adopts the status of the vacated unit, and the vacated unit assumes the status the newly occupied unit had immediately prior to its occupancy by the qualifying residents.

Timing Issues

The methods of committing rental units to tenants varies in different jurisdictions. H o w e v e r, it is a common rental practice to have some form of preliminary reservation for a unit prior to the date on which a lease is signed or the unit is occupied. Thus, several commentators have requested clarification that once a unit is reserved for a prospective tenant, it is no longer treated as available for purposes of the available unit rule. A c c o r d i n g l y, the final regulations provide that a unit is not available for purposes of the available unit rule when the unit is no longer available for rent due to a reservation that is binding under local law.

F i n a l l y, financing arrangements using obligations that purport to be exempt facility bonds under section 142 must meet the requirements of sections 103 and 141 through 150 for interest on the obligations to be excluded from gross income under section 103(a). The requirements under section 142(d) may differ from those under section 42. A c c o r d i n g l y, the final regulations provide that the rules under the final regulations are not intended as an interpretation of the applicable rules under section 142.

Special Analyses

It has been determined that this Tr e asury decision is not a significant regula

tory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because these regulations do not impose on small entities a collection of information requirement, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information

The principal author of these regulations is David Selig, Office of the A s s i s t a n t Chief Counsel (Passthroughs and Special Industries), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

Adoption of Amendments to the

Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.42-15 is also issued under 26 U.S.C. 42(n); * * *

Par. 2. Section 1.42-15 is added to read as follows:

§1.42–15 Available unit rule.

(a) D e f i n i t i o n s . The following definitions apply to this section:

Applicable income limitation means the limitation applicable under section 42(g)(1) or, for deep rent skewed projects described in section 142(d)(4)(B), 40 percent of area median gross income.

Available unit ru l e means the rule in section 42(g)(2)(D)(ii).

Comparable unit means a residential unit in a low-income building that is comparably sized or smaller than an over-in

come unit or, for deep rent skewed projects described in section 142(d)(4)(B), any low-income unit. For purposes of determining whether a residential unit is comparably sized, a comparable unit must be measured by the same method used to determine qualified basis for the credit year in which the comparable unit became available.

Current resident means a person who is living in the low-income building.

Low-income unit is defined by section 42(i)(3)(A). Nonqualified resident means a new occupant or occupants whose aggregate income exceeds the applicable income limitation.

Over-income unit means a low-income unit in which the aggregate income of the occupants of the unit increases above 140 percent of the applicable income limitation under section 42(g)(1), or above 170 percent of the applicable income limitation for deep rent skewed projects described in section 142(d)(4)(B).

Qualified re s i d e n t means an occupant either whose aggregate income (combined with the income of all other occupants of the unit) does not exceed the applicable income limitation and who is otherwise a low-income resident under section 42, or who is a current resident.

(b) General section 42(g)(2)(D)(i) rule. Except as provided in paragraph (c) of this section, notwithstanding an increase in the income of the occupants of a lowincome unit above the applicable income limitation, if the income of the occupants initially met the applicable income limitation, and the unit continues to be rentrestricted—

(1) The unit continues to be treated as a low-income unit; and

(2) The unit continues to be included in the numerator and the denominator of the ratio used to determine whether a project satisfies the applicable minimum setaside requirement of section 42(g)(1).

(c) E x c e p t i o n . A unit ceases to be treated as a low-income unit if it becomes an over-income unit and a nonqualified resident occupies any comparable unit that is available or that subsequently becomes available in the same low-income building. In other words, the owner of a low-income building must rent to qualified residents all comparable units that are available or that subsequently become

1997–42 I R B 5 October 20 1997

available in the same building to continue treating the over-income unit as a low-income unit. Once the percentage of lowincome units in a building (excluding the over-income units) equals the percentage of low-income units on which the credit is based, failure to maintain the over-income units as low-income units has no immediate significance. The failure to maintain the over-income units as low-income units, however, may affect the decision of whether or not to rent a particular available unit at market rate at a later time. A unit is not available for purposes of the available unit rule when the unit is no longer available for rent due to contractual arrangements that are binding under local law (for example, a unit is not available if it is subject to a preliminary reservation that is binding on the owner under local law prior to the date a lease is signed or the unit is occupied).

(d) Effect of current resident moving within building. When a current resident moves to a different unit within the building, the newly occupied unit adopts the status of the vacated unit. Thus, if a current resident, whose income exceeds the applicable income limitation, moves from an over-income unit to a vacant unit in the same building, the newly occupied unit is treated as an over-income unit. The vacated unit assumes the status the newly occupied unit had immediately before it was occupied by the current resident.

(i) Effective date. This section applies to leases entered into or renewed on and after September 26, 1997.

Michael P. Dolan, Acting Commissioner of

Internal Revenue.

Approved August 28, 1997.

Donald C. Lubick, Acting Assistant Secretary of

the Treasury.

(Filed by the Office of the Federal Register on September 25, 1997, 8:45 a.m., and published in the issue of the Federal Register for September 26, 1997, 62 F.R. 50503)

26 CFR 1.42–16: Eligible basis reduced by federal grants.

T.D. 8731

D E PA RTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1

Section 42(d)(5) Federal Grants

A G E N C Y: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

S U M M A RY: This document contains final regulations with respect to the lowincome housing tax credit relating to the application of section 42(d)(5) to certain rental assistance programs under section 42(g)(2)(B)(i). The regulations clarify that certain types of federal rental assistance payments do not result in a reduction in the eligible basis of a low-income housing building. DATES: These regulations are effective September 26, 1997.

For date of applicability for these regulations, see §1.42–16(d).

FOR FURTHER INFORMATION CONTACT: Christopher J. Wilson, (202) 6223040 (not a toll-free call).

SUPPLEMENTARYINFORMATION:

Background

Temporary regulations (TD 8713

[1997–14 I.R.B. 4]) and a notice of proposed rulemaking cross-referencing the

(e) Available unit rule applies sepa - rately to each building in a project. In a project containing more than one low-income building, the available unit rule applies separately to each building.

(f) Result of noncompliance with avail - able unit rule. If any comparable unit that is available or that subsequently becomes available is rented to a nonqualified resident, all over-income units for which the available unit was a comparable unit within the same building lose their status as low-income units; thus, comparably sized or larger over-income units would lose their status as low-income units.

(h) Examples. The following examples illustrate this section:

Example 1. This example illustrates noncompliance with the available unit rule in a low-income building containing three over-income units. On January 1, 1998, a qualified low-income housing project, consisting of one building containing ten identically sized residential units, received a housing credit dollar amount allocation from a state housing credit agency for five low-income units. By the close of 1998, the first year of the credit period, the project satisfied the minimum set-aside requirement of section 42(g)(1)(B). Units 1, 2, 3, 4, and 5 were occupied by individuals whose incomes did not exceed the income limitation applicable under section 42(g)(1) and were otherwise low-income residents under section 42. Units 6, 7, 8, and 9 were occupied by market-rate tenants. Unit 10 was vacant. To avoid recapture of credit, the project owner must maintain five of the units as low-income units. On November 1, 1999, the certificates of annual income state that annual incomes of the individuals in Units 1, 2, and 3 increased above 140 percent of the income limitation applicable under section 42(g)(1), causing those units to become

v e r-income units. On November 30, 1999, Units 8 and 9 became vacant. On December 1, 1999, the project owner rented Units 8 and 9 to qualified residents who were not current residents at rates meeting the rent restriction requirements of section 42(g)(2). On December 31, 1999, the project owner rented Unit 10 to a market-rate tenant. Because Unit 10, an available comparable unit, was leased to a market-rate tenant, Units 1, 2, and 3 ceased to be treated as low-income units. On that date, Units 4, 5, 8, and 9 were the only remaining low-income units. Because the project owner did not maintain five of the residential units as low-income units, the qualified basis in the building is reduced, and credit must be recaptured. If the project owner had rented Unit 10 to a qualified resident who was not a current resident, eight of the units would be low-income units. At that time, Units 1, 2, and 3, the overincome units, could be rented to market-rate tenants because the building would still contain five low-income units.

Example 2. This example illustrates the provisions of paragraph (d) of this section. A l o w - i ncome project consists of one six-floor building. The residential units in the building are identically sized. The building contains two over-income units on the sixth floor and two vacant units on the first f l o o r. The project owner, desiring to maintain the

v e r-income units as low-income units, wants to rent the available units to qualified residents. J, a resident of one of the over-income units, wishes to occupy a unit on the first floor. J’s income has recently increased above the applicable income limitation. The project owner permits J to move into one of the units on the first floor. Despite J’s income exceeding the applicable income limitation, J is a qualified resident under the available unit rule because J is a current resident of the building. T h e unit newly occupied by J becomes an over- i n c o m e unit under the available unit rule. The unit vacated by J assumes the status the newly occupied unit had immediately before J occupied the unit. The overincome units in the building continue to be treated as low-income units.

(g) Relationship to tax-exempt bond p ro v i s i o n s . Financing arrangements that purport to be exempt-facility bonds under section 142 must meet the requirements of sections 103 and 141 through 150 for interest on the obligations to be excluded from gross income under section 103(a). This section is not intended as an interpretation under section 142.

October 20 1997 6 1997–42 I R B

temporary regulations were published in the Federal Register for January 27, 1997 (62 FR 3792, 3848 [REG–254394– 96 I.R.B. 14]). Those regulations provide that certain federal rental assistance payments made to the owner of a building on behalf of low-income tenants are not federal grants with respect to a building or its operation that require a reduction in the b u i l d i n g ’s eligible basis under section 42(d)(5) of the Internal Revenue Code (Code). These payments include rental assistance payments made under section 8 of the United States Housing Act of 1937 (Act) (42 U.S.C. 1437f), certain payments made under section 9 of the Act, and payments made under such other programs or methods of rental assistance as may be designated in the Federal Register or the Internal Revenue Bulletin. The notice of proposed rulemaking indicated that comments would be considered on those areas addressed in the temporary regulations. Written comments responding to the notice of proposed rulemaking were received. There was no request for a public hearing, and no public hearing was held. After consideration of all the written comments, the proposed regulations have been adopted, without change, by this Treasury decision.

Summary of Comments

One commenter suggested that the final regulations provide additional guidance for state agencies to use in determining whether similar programs beyond those described in the regulations should be considered grants that cause a reduction in a building’s eligible basis under section 42(d)(5) of the Code. The final regulations do not adopt this suggestion. T h e scope of this regulation is limited to specified rental assistance payments that are not grants requiring a reduction in a buildi n g ’s eligible basis and any additional payments the Secretary may designate in the future.

Another commenter suggested that §1.42–16(c)(3) should be deleted if it is intended to impose conditions beyond the restrictions under section 9 of the Act, because the IRS is improperly infringing upon the Department of Housing and Urban Development’s (HUD) authority to provide subsidies under section 9. T h e final regulations do not adopt this suggestion. Section 1.42–16 does not interpret

H U D ’s authority for paying subsidies under section 9; it describes the extent to which section 9 payments may be made without a reduction in a building’s eligible basis under section 42(d)(5) of the Code. The conditions imposed on section 9 payments in §1.42–16(c)(3) serve to diff e r e ntiate section 9 assistance for operating expenses that function in a manner similar to rental assistance payments under section 8 of the Act from section 9 assistance that is applied to uses more closely associated with operational expenses requiring a reduction in a building’s eligible basis under section 42(d)(5).

This commenter also suggested that if §1.42–16(c)(3) were to be retained, it should be clarified to provide that actual operating costs be determined by HUD and/or the appropriate public housing a g e n c y. The commenter reasons that HUD is already making this determination in the context of deciding the proper amount of assistance to make under section 9 of the Act, and that precedent already exists for allowing HUD to make certain interpretations relating to the section 42 program. The final regulations do not adopt this suggestion. The IRS and Treasury believe they should retain the ability to determine what costs are appropriately characterized as operating costs that require a reduction in a building’s eligible basis under section 42(d)(5) of the C o d e .

Special Analyses

It has been determined that this Tr e asury decision is not a significant regulatory action as defined in EO 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations and, because these regulations do not impose on small entities a collection of information requirement, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

(a) In general. If, during any taxable year of the compliance period (described in section 42(i)(1)), a grant is made with respect to any building or the operation thereof and any portion of the grant is funded with federal funds (whether or not includible in gross income), the eligible basis of the building for the taxable year and all succeeding taxable years is reduced by the portion of the grant that is so funded.

(b) Grants do not include certain rental assistance payments. A federal rental assistance payment made to a building owner on behalf or in respect of a tenant is not a grant made with respect to a building or its operation if the payment is made pursuant to—

(1) Section 8 of the United States Housing Act of 1937;

(2) A qualifying program of rental assistance administered under section 9 of the United States Housing Act of 1937; or

(3) A program or method of rental assistance as the Secretary may designate by publication in the Federal Register or in the Internal Revenue Bulletin (see §601.601(d)(2) of this chapter).

Drafting Information

The principal author of these regulations is Christopher J. Wilson, Office of A s s i s tant Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 1 is amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 is amended by removing the entry for §1.42–16T and adding an entry in numerical order to read as follows:

Authority: 26 U.S.C. 7805 * * * Section 1.42–16 also issued under 26 U.S.C. 42(n); * * *

P a r. 2. Section 1.42–16 is added to read as follows:

§1.42–16 Eligible basis reduced by federal grants.

1997–42 I R B 7 October 20 1997

g r a m . For purposes of paragraph (b)(2) of this section, payments are made pursuant to a qualifying rental assistance program administered under section 9 of the United States Housing Act of 1937 to the extent that the payments—

(1) Are made to a building owner pursuant to a contract with a public housing authority with respect to units the owner has agreed to maintain as public housing units (PH-units) in the building;

(2) Are made with respect to units occupied by public housing tenants, provided that, for this purpose, units may be considered occupied during periods of short term vacancy (not to exceed 60 days); and

(3) Do not exceed the difference between the rents received from a building’s PH-unit tenants and a pro rata portion of the building’s actual operating costs that are reasonably allocable to the PH-units (based on square footage, number of bedrooms, or similar objective criteria), and provided that, for this purpose, operating costs do not include any development costs of a building (including developer’s fees) or the principal or interest of any debt incurred with respect to any part of

the building.

(d) Effective date. This section is effective September 26, 1997.

§1.42–16T [Removed]

Par. 3. Section 1.42–16T is removed.

Michael P. Dolan, Acting Commissioner of

Internal Revenue.

Approved August 26, 1997.

Donald C. Lubick, Acting Assistant Secretary of

the Treasury.

(Filed by the Office of the Federal Register on September 25, 1997, 8:45 a.m., and published in the issue of the Federal Register for September 26, 1997, 62 F.R. 50502)

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

26 CFR 1.472-1: Last-in, first-out inventories.

LIFO; price indexes; depart m e n t stores. The August 1997 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, August 31, 1997.

Rev. Rul. 97–43

The following Department Store Inventory Price Indexes for August 1997 were issued by the Bureau of Labor Statistics on September 16, 1997. The indexes are accepted by the Internal Revenue Service, under § 1.472-1(k) of the Income Ta x 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, firstout inventory methods for tax years ended on, or with reference to, August 31, 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 separ a t e l y, except for the following: candy, foods, liquor, tobacco, and contract departments.

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORYPRICE INDEXES BY DEPARTMENT GROUPS

(January 1941 = 100, unless otherwise noted)

Percent Change Groups Aug. Aug. from Aug. 1996 1996 1997 to Aug. 19971

Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .524.3 509.3 –2.9
Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .642.6 652.8 1.6
Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . .640.3 644.1 0.6
Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .895.9 895.6 0.0
Infants’Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .610.3 621.2 1.8
Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .525.8 548.8 4.4
Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .287.5 301.6 4.9
Women’s and Girls’Accessories . . . . . . . . . . . . . . . . . . . . . . . .546.2 539.7 –1.2
Women’s Outerwear and Girls’Wear . . . . . . . . . . . . . . . . . . . . .381.2 397.4 4.2
Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .611.7 621.2 1.6
Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .567.9 584.8 3.0
Boys’Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . . . . . .485.4 492.2 1.4
Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1023.8 1008.6 –1.5
Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .770.0 793.8 3.1
Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .885.1 904.7 2.2
Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .669.2 661.0 –1.2
Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .588.7 598.8 1.7
Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .810.6 806.1 –0.6
Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .244.8 242.8 –0.8
Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78.8 75.4 –4.3

October 20 1997 8 1997–42 I R B

BUREAU OF LABOR STATISTICS, DEPARTMENT STORE INVENTORYPRICE INDEXES BYDEPARTMENT GROUPS—Continued

(January 1941 = 100, unless otherwise noted)

Percent Change Groups Aug. Aug. from Aug. 1996 1996 1997 to Aug. 19971

Recreation and Education2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112.1 110.1 –1.822. Home Improvements2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.9 132.3 5.1
Auto Accessories2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107.2 108.4 1.1

Groups 1 – 15: Soft Goods- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .582.9 594.5 2.0

Groups 16 – 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . .469.2 463.1 –1.3

Groups 21 – 23: Misc. Goods2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113.1 112.6 –0.4

Store Total3- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .544.0 549.3 1.0

1Absence of a minus sign before percentage change in this column signifies 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, 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).

Section 3504.—Acts To Be Performed by Agents

26 CFR 31.3504–1: Acts to be performed by agents.

Requirements of the Form 941 Electronic Filing (ELF) Program are provided. See Rev. Proc. 97–47, page 00.

Section 4261.—Imposition of Tax

26 CFR 49.4261–1: Imposition of Tax; in general.

This revenue procedure provides a list of “rural airports” as that term is defined in § 4261(e)(1)(B) of the Internal Revenue Code, for purposes of computing the tax on air transportation. The revenue procedure also provides guidance on how to calculate the tax where at least one segment of multiple segment domestic transportation does not begin or end at a rural airport. See Rev. Proc. 97–46, page 00.

Section 6011.—General Requirements of Return, Statement, or List

26 CFR 31.6011(a)–7: Execution of returns.

Requirements of the Form 941 Electronic Filing (ELF) Program are provided. See Rev. Proc. 97–47, page 00.

Section 6061.—Signing of Returns and Other Documents

26 CFR 31.6061–1: Signing of returns.

Requirements of the Form 941 Electronic Filing

(ELF) Program are provided. See Rev. Proc. 97–47, page 00.

26 CFR 301.6061–1: Signing of returns and other documents.

Requirements of the Form 941 Electronic Filing (ELF) Program are provided. See Rev. Proc. 97–47, page 00.

Section 6071.—Time for Filing Returns and Other Documents

26 CFR 31.6071(a)(1): Time for filing returns and other documents.

Requirements of the Form 941 Electronic Filing (ELF) Program are provided. See Rev. Proc. 97–47, page 00.

1997–42 I R B 9 October 20 1997