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SECTION 1. PURPOSE

Internal Revenue Bulletin 1998-15 · 2026-10-03 edition · updated 2026-10-04 · United States

This revenue procedure provides guidance for a taxpayer that wants to change to a method of accounting for estimating inventory “shrinkage” in computing ending inventory. “Shrinkage” refers collectively to such items as undetected theft,

breakage, and bookkeeping errors. In addition, section 4 of this revenue procedure provides interim guidance that describes the “retail safe harbor method” for a taxpayer that wants to change to the retail safe harbor method for estimating inventory shrinkage. The procedures for a taxpayer within the scope of this revenue procedure to automatically change to a method of accounting for estimating inventory shrinkage are provided in Rev. Proc. 97–37, 1997–33 I.R.B. 18, as modified by section 5.02 of this revenue procedure. This revenue procedure also requests comments on issues that should be addressed in forthcoming regulations under § 471 regarding proper methods of estimating inventory shrinkage for taxable years ending after August 5, 1997.

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▸Contents — Internal Revenue Bulletin 1998-15
Internal Revenue Bulletin 1998-15

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