Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 61.—Gross Income Defined

26 CFR 1.61–21: Taxation of fringe benefits.

Fringe benefits aircraft valuation formula. For purposes of section 1.61 –21(g) of the Income Tax Regulations, relating to the rule for valuing noncommercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charges in effect for the second half of 2001 are set forth.

Rev. Rul. 2001–42

For purposes of the taxation of fringe benefits under section 61 of the Internal Revenue Code, section 1.61–21(g) of the Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61–21(g)(5) provides an aircraft valuation formula to determine the value of such flights. The value of a flight is determined under the base aircraft valuation formula (also known as the Standard Industry Fare Level formula or SIFL) by

multiplying the SIFL cents-per-mile rates applicable for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61–21(g)(7) and then adding the applicable terminal charge. The SIFL cents-permile rates in the formula and the terminal charge are calculated by the Department of Transportation and are reviewed semiannually.

The following chart sets forth the terminal charges and SIFL mileage rates:

Period During Which Terminal SIFL Mileage the Flight Is Taken Charge Rates

7/1/01 - 12/31/01 $36.88 Up to 500 miles = $.2017 per mile

501-1500 miles = $.1538 per mile

Over 1500 miles = $.1479 per mile

DRAFTING INFORMATION

The principle author of this revenue ruling is Kathleen Edmondson of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue ruling, contact Ms. Edmondson at (202) 622-6040 (not a tollfree call).

Section 446.—General Rule for Methods of Accounting

26 CFR 1.446–1: General rule for methods of accounting.

A safe harbor method of accounting is provided for track structure expenditures paid or incurred by certain railroads, as well as procedures for automatic consent to change to this method. See Rev. Proc. 2001–46, page 263.

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

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

LIFO; price indexes; department stores. The July 2001 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, July 31, 2001.

Rev. Rul. 2001–44

The following Department Store Inventory Price Indexes for July 2001 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 appro

priate 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, July 31, 2001.

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.

2001–37 I.R.B. 223 September 10, 2001

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

(January 1941 = 100, unless otherwise noted)

Percent Change Groups July July from July 2000 2000 2001 to July 2001 ¹

1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519.6 495.0 -4.7
2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . 630.3 604.1 -4.2
3. Women’s and Children’s Shoes . . . . . . . . . . . . . . . . . . . . 613.6 652.3 6.3
4. Men’s Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 896.4 865.9 -3.4
5. Infants’ Wear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629.5 593.7 -5.7
6. Women’s Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561.4 567.1 1.0
7. Women’s Hosiery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335.1 352.6 5.2
8. Women’s and Girls’Accessories . . . . . . . . . . . . . . . . . . . 528.2 542.1 2.6
9. Women’s Outerwear and Girls’ Wear . . . . . . . . . . . . . . . . 364.0 355.7 -2.3
10. Men’s Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602.8 577.6 -4.2
11. Men’s Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608.8 588.4 -3.4
12. Boys’ Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . 478.6 476.0 -0.5
13. Jewelry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945.5 946.5 0.1
14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 780.8 805.8 3.2
15. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . 965.7 972.5 0.7
16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . 689.2 637.7 -7.5
17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609.8 628.7 3.1
18. Housewares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 783.5 771.5 -1.5
19. Major Appliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232.9 225.6 -3.1
20. Radio and Television . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59.1 53.9 -8.8
21. Recreation and Education ² . . . . . . . . . . . . . . . . . . . . . . . . 92.6 89.8 -3.0
22. Home Improvements ² . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.9 125.8 -1.6
23. Auto Accessories ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.5 109.4 2.7

Groups 1 - 15: Soft Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . 583.3 575.7 -1.3

Groups 16 - 20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . 439.9 423.3 -3.8

Groups 21 - 23: Misc. Goods ² . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 98.5 -1.5

Store Total ³ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529.2 519.5 -1.8

1 Absence of a minus sign before the percentage change in this column signifies a 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, 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) 622-4930 (not a toll-free call).

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

26 CFR 1.481–1: Adjustments in general.

A safe harbor method of accounting is provided for track structure expenditures paid or incurred by certain railroads, as well as procedures for automatic consent to change to this method. See Rev. Proc. 2001–46, page 263.

September 10, 2001 224 2001–37 I.R.B.