INCOME TAX

Rev. Rul. 2001–1, page 726. E & P adjustments on exercise of option. The earnings and profits of a corporate employer are reduced to reflect the deduction the corporation takes when an employee receives stock upon exercise of a nonstatutory stock option.

Rev. Rul. 2001–8, page 726. Inventories; floor stocks payments. Payments made or received with respect to floor stocks must be accounted for as adjustments to the invoice price or production cost of the goods physically held on the floor stocks date to which the payments relate, rather than as an adjustment to the tax basis (carrying value) of those goods. This ruling provides, for costing purposes, an optional simplifying assumption for LIFO taxpayers regarding identification of the goods physically held on the floor stocks date to which the floor stocks payments relate. Rev. Ruls. 85–30 and 88–95 clarified. Rev. Proc. 99–49 modified and amplified.