Part I. Rulings — Internal Revenue Bulletin 2002-12

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

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

LIFO; price indexes; department stores. The January 2002 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, January 31, 2002.

Rev. Rul. 2002–14

The following Department Store Inventory Price Indexes for January 2002 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 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, January 31, 2002.

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.

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

(January 1941 = 100, unless otherwise noted)

Groups Jan. Jan. 2001 2002

Percent Change

from Jan. 2001

to Jan. 2002 ¹

Piece Goods ------------------------------------------------------------ 490.8 479.8 -2.2
Domestics and Draperies -------------------------------------------- 614.6 588.3 -4.3
Women’s and Children’s Shoes ------------------------------------ 628.8 607.3 -3.4
Men’s Shoes ----------------------------------------------------------- 886.8 875.0 -1.3
Infants’ Wear ----------------------------------------------------------- 609.2 602.2 -1.1
Women’s Underwear ------------------------------------------------- 556.3 556.8 0.1
Women’s Hosiery ----------------------------------------------------- 343.8 350.3 1.9
Women’s and Girls’ Accessories ----------------------------------- 526.9 559.0 6.1
Women’s Outerwear and Girls’ Wear ----------------------------- 369.7 350.2 -5.3
Men’s Clothing -------------------------------------------------------- 586.1 565.6 -3.5
Men’s Furnishings ---------------------------------------------------- 603.2 586.5 -2.8
Boys’ Clothing and Furnishings ------------------------------------ 484.6 467.1 -3.6
Jewelry ------------------------------------------------------------------ 956.1 918.2 -4.0
Notions ------------------------------------------------------------------ 784.3 770.1 -1.8
Toilet Articles and Drugs -------------------------------------------- 987.1 969.1 -1.8
Furniture and Bedding ----------------------------------------------- 685.2 625.9 -8.7
Floor Coverings ------------------------------------------------------- 630.1 630.4 0.0
Housewares ------------------------------------------------------------ 769.4 757.8 -1.5
Major Appliances ----------------------------------------------------- 229.9 227.0 -1.3
Radio and Television ------------------------------------------------- 56.8 51.9 -8.6

1 Absence of a minus sign before the percentage change in this column signifies a price increase.

2002–12 I.R.B. 636 March 25, 2002

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

(January 1941 = 100, unless otherwise noted)

Groups Jan. Jan. 2001 2002

Percent Change

from Jan 2001

to Jan. 2002 ¹

Recreation and Education ² ------------------------------------------ 91.0 88.1 -3.2
Home Improvements ² ------------------------------------------------ 127.7 124.6 -2.4
Auto Accessories ² ----------------------------------------------------- 108.7 110.5 1.7

Groups 1 - 15: Soft Goods ----------------------------------------------- 583.7 566.2 -3.0

Groups 16 - 20: Durable Goods ----------------------------------------- 432.9 417.1 -3.6

Groups 21 - 23: Misc. Goods ² ------------------------------------------- 99.4 97.5 -1.9

Store Total ³ ------------------------------------------------------------- 527.4 511.5 -3.0

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.

during the first calendar quarter beginning after such month.

Section 6621(b)(2)(B) provides that in determining the addition to tax under § 6654 for failure to pay estimated tax for any taxable year, the federal short-term rate that applies during the third month following such taxable year also applies during the first 15 days of the fourth month following such taxable year.

Section 6621(b)(3) provides that the federal short-term rate for any month is the federal short-term rate determined during such month by the Secretary in accordance with § 1274(d), rounded to the nearest full percent (or, if a multiple of 1/2 of 1 percent, the rate is increased to the next highest full percent).

Notice 88–59 (1988–1 C.B. 546) announced that, in determining the quarterly interest rates to be used for overpayments and underpayments of tax under § 6621, the Internal Revenue Service will use the federal short-term rate based on daily compounding because that rate is most consistent with § 6621 which, pursuant to § 6622, is subject to daily compounding.

Rounded to the nearest full percent, the federal short-term rate based on daily compounding determined during the month of January 2002 is 3 percent. Accordingly, an overpayment rate of 6

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) 622–7718 (not a tollfree call).

Section 6621.— Determin- ation of Interest Rate

26 CFR 301.6621–1: Interest rate.

Interest rates; underpayments and overpayments. The rate of interest determined under section 6621 of the Code for the calendar quarter beginning April 1, 2002, will be 6 percent for overpayments (5 percent in the case of a corporation), 6 percent for underpayments, and 8 percent for large corporate underpayments. The rate of interest paid on the portion of a corporate overpayment exceeding $10,000 will be 3.5 percent.

Rev. Rul. 2002–13

Section 6621 of the Internal Revenue Code establishes the rates for interest on tax overpayments and tax underpayments.

Under § 6621(a)(1), the overpayment rate beginning April 1, 2002, is the sum of the federal short-term rate plus 3 percentage points (2 percentage points in the case of a corporation), except the rate for the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the sum of the federal short-term rate plus 0.5 of a percentage point for interest computations made after December 31, 1994. Under § 6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points.

Section 6621(c) provides that for purposes of interest payable under § 6601 on any large corporate underpayment, the underpayment rate under § 6621(a)(2) is determined by substituting “5 percentage points” for “3 percentage points.” See § 6621(c) and § 301.6621–3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date. Section 6621(c) and § 301.6621–3 are generally effective for periods after December 31, 1990. Section 6621(b)(1) provides that the Secretary will determine the federal short-term rate for the first month in each calendar quarter.

Section 6621(b)(2)(A) provides that the federal short-term rate determined under § 6621(b)(1) for any month applies

March 25, 2002 637 2002–12 I.R.B.

percent (5 percent in the case of a corporation) and an underpayment rate of 6 percent are established for the calendar quarter beginning April 1, 2002. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 for the calendar quarter beginning April 1, 2002, is 3.5 percent. The underpayment rate for large corporate underpayments for the calendar quarter beginning April 1, 2002, is 8 percent. These rates apply to amounts bearing interest during that calendar quarter.

Under § 6621(b)(2)(B), the 6 percent rate that applies to estimated tax under

payments for the first calendar quarter in 2002, as provided in Rev. Rul. 2001–63 (2001–52 I.R.B. 606), also applies to such underpayments for the first 15 days in April 2002.

Interest factors for daily compound interest for annual rates of 3.5 percent, 5 percent, 6 percent, and 8 percent are published in Tables 12, 15, 17, and 21 of Rev. Proc. 95–17 (1995–1 C.B. 556, 566, 569, 571, and 575). Annual interest rates to be compounded daily pursuant to § 6622 that apply for prior periods are set forth in the tables accompanying this revenue ruling.

DRAFTING INFORMATION

The principal author of this revenue ruling is Raymond Bailey of the Office of Associate Chief Counsel (Procedure & Administration), Administrative Provisions & Judicial Practice Division. For further information regarding this revenue ruling, contact Mr. Bailey at (202) 622– 6226 (not a toll-free call).

TABLE OF INTEREST RATES PERIODS BEFORE JUL. 1, 1975 - PERIODS ENDING DEC. 31, 1986

OVERPAYMENTS AND UNDERPAYMENTS

In 1995–1 C.B.

PERIOD RATE

DAILY RATE TABLE

Before Jul. 1, 1975 6% Table 2, pg. 557

Jul. 1, 1975—Jan. 31, 1976 9% Table 4, pg. 559

Feb. 1, 1976—Jan. 31, 1978 7% Table 3, pg. 558

Feb. 1, 1978—Jan. 31, 1980 6% Table 2, pg. 557

Feb. 1, 1980—Jan. 31, 1982 12% Table 5, pg. 560

Feb. 1, 1982—Dec. 31, 1982 20% Table 6, pg. 560

Jan. 1, 1983—Jun. 30, 1983 16% Table 37, pg. 591

Jul. 1, 1983—Dec. 31, 1983 11% Table 27, pg. 581

Jan. 1, 1984—Jun. 30, 1984 11% Table 75, pg. 629

Jul. 1, 1984—Dec. 31, 1984 11% Table 75, pg. 629

Jan. 1, 1985—Jun. 30, 1985 13% Table 31, pg. 585

Jul. 1, 1985—Dec. 31, 1985 11% Table 27, pg. 581 Jan. 1, 1986—Jun. 30, 1986 10% Table 25, pg. 579

Jul. 1, 1986—Dec. 31, 1986 9% Table 23, pg. 577

TABLE OF INTEREST RATES

FROM JAN. 1, 1987 - DEC. 31, 1998

OVERPAYMENTS UNDERPAYMENTS 1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG

Jan. 1, 1987—Mar. 31, 1987 8% 21 575 9% 23 577 Apr. 1, 1987—Jun. 30, 1987 8% 21 575 9% 23 577 Jul. 1, 1987—Sep. 30, 1987 8% 21 575 9% 23 577

Oct. 1, 1987—Dec. 31, 1987 9% 23 577 10% 25 579 Jan. 1, 1988—Mar. 31, 1988 10% 73 627 11% 75 629

2002–12 I.R.B. 638 March 25, 2002

TABLE OF INTEREST RATES FROM JAN. 1, 1987 - DEC. 31, 1998—CONTINUED

OVERPAYMENTS UNDERPAYMENTS 1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG Apr. 1, 1988—Jun. 30, 1988 9% 71 625 10% 73 627 Jul. 1, 1988—Sep. 30, 1988 9% 71 625 10% 73 627 Oct. 1, 1988—Dec. 31, 1988 10% 73 627 11% 75 629 Jan. 1, 1989—Mar. 31, 1989 10% 25 579 11% 27 581 Apr. 1, 1989—Jun. 30, 1989 11% 27 581 12% 29 583 Jul. 1, 1989—Sep. 30, 1989 11% 27 581 12% 29 583 Oct. 1, 1989—Dec. 31, 1989 10% 25 579 11% 27 581 Jan. 1, 1990—Mar. 31, 1990 10% 25 579 11% 27 581 Apr. 1, 1990—Jun. 30, 1990 10% 25 579 11% 27 581

Jul. 1, 1990—Sep. 30, 1990 10% 25 579 11% 27 581

Oct. 1, 1990—Dec. 31, 1990 10% 25 579 11% 27 581

Jan. 1, 1991—Mar. 31, 1991 10% 25 579 11% 27 581

Apr. 1, 1991—Jun. 30, 1991 9% 23 577 10% 25 579

Jul. 1, 1991—Sep. 30, 1991 9% 23 577 10% 25 579

Oct. 1, 1991—Dec. 31, 1991 9% 23 577 10% 25 579

Jan. 1, 1992—Mar. 31, 1992 8% 69 623 9% 71 625

Apr. 1, 1992—Jun. 30, 1992 7% 67 621 8% 69 623

Jul. 1, 1992—Sep. 30, 1992 7% 67 621 8% 69 623

Oct. 1, 1992—Dec. 31, 1992 6% 65 619 7% 67 621

Jan. 1, 1993—Mar. 31, 1993 6% 17 571 7% 19 573

Apr. 1, 1993—Jun. 30, 1993 6% 17 571 7% 19 573

Jul. 1, 1993—Sep. 30, 1993 6% 17 571 7% 19 573

Oct. 1, 1993—Dec. 31, 1993 6% 17 571 7% 19 573

Jan. 1, 1994—Mar. 31, 1994 6% 17 571 7% 19 573

Apr. 1, 1994—Jun. 30, 1994 6% 17 571 7% 19 573 Jul. 1, 1994—Sep. 30, 1994 7% 19 573 8% 21 575

Oct. 1, 1994—Dec. 31, 1994 8% 21 575 9% 23 577 Jan. 1, 1995—Mar. 31, 1995 8% 21 575 9% 23 577 Apr. 1, 1995—Jun. 30, 1995 9% 23 577 10% 25 579

Jul. 1, 1995—Sep. 30, 1995 8% 21 575 9% 23 577 Oct. 1, 1995—Dec. 31, 1995 8% 21 575 9% 23 577 Jan. 1, 1996—Mar. 31, 1996 8% 69 623 9% 71 625 Apr. 1, 1996—Jun. 30, 1996 7% 67 621 8% 69 623 Jul. 1, 1996—Sep. 30, 1996 8% 69 623 9% 71 625

Oct. 1, 1996—Dec. 31, 1996 8% 69 623 9% 71 625 Jan. 1, 1997—Mar. 31, 1997 8% 21 575 9% 23 577 Apr. 1, 1997—Jun. 30, 1997 8% 21 575 9% 23 577

Jul. 1, 1997—Sep. 30, 1997 8% 21 575 9% 23 577 Oct. 1, 1997—Dec. 31, 1997 8% 21 575 9% 23 577

March 25, 2002 639 2002–12 I.R.B.

TABLE OF INTEREST RATES FROM JAN. 1, 1987 - Dec. 31, 1998—CONTINUED

OVERPAYMENTS UNDERPAYMENTS 1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG Jan. 1, 1998—Mar. 31, 1998 8% 21 575 9% 23 577 Apr. 1, 1998—Jun. 30, 1998 7% 19 573 8% 21 575 Jul. 1, 1998—Sep. 30, 1998 7% 19 573 8% 21 575 Oct. 1, 1998—Dec. 31, 1998 7% 19 573 8% 21 575

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT NONCORPORATE OVERPAYMENTS AND UNDERPAYMENTS

1995–1 C.B.

RATE TABLE PAGE

Jan. 1, 1999—Mar. 31, 1999 7% 19 573

Apr. 1, 1999—Jun. 30, 1999 8% 21 575

Jul. 1, 1999—Sep. 30, 1999 8% 21 575

Oct. 1, 1999—Dec. 31, 1999 8% 21 575

Jan. 1, 2000—Mar. 31, 2000 8% 69 623

Apr. 1, 2000—Jun. 30, 2000 9% 71 625

Jul. 1, 2000—Sep. 30, 2000 9% 71 625

Oct. 1, 2000—Dec 31, 2000 9% 71 625

Jan. 1, 2001—Mar. 31, 2001 9% 23 577

Apr. 1, 2001—Jun. 30, 2001 8% 21 575

Jul. 1, 2001—Sep. 30, 2001 7% 19 573

Oct. 1, 2001—Dec. 31, 2001 7% 19 573

Jan. 1, 2002—Mar. 31, 2002 6% 17 571

Apr. 1, 2002—Jun. 30, 2002 6% 17 571

2002–12 I.R.B. 640 March 25, 2002

TABLE OF INTEREST RATES FROM JANUARY 1, 1999 - PRESENT CORPORATE OVERPAYMENTS AND UNDERPAYMENTS

OVERPAYMENTS UNDERPAYMENTS 1995–1 C.B. 1995–1 C.B. RATE TABLE PG RATE TABLE PG Jan. 1, 1999—Mar. 31, 1999 6% 17 571 7% 19 573 Apr. 1, 1999—Jun. 30, 1999 7% 19 573 8% 21 575 Jul. 1, 1999—Sep. 30, 1999 7% 19 573 8% 21 575 Oct. 1, 1999—Dec. 31, 1999 7% 19 573 8% 21 575 Jan. 1, 2000—Mar. 31, 2000 7% 67 621 8% 69 623 Apr. 1, 2000—Jun. 30, 2000 8% 69 623 9% 71 625 Jul. 1, 2000—Sep. 30, 2000 8% 69 623 9% 71 625 Oct. 1, 2000—Dec. 31, 2000 8% 69 623 9% 71 625

Jan. 1, 2001—Mar. 31, 2001 8% 21 575 9% 23 577

Apr. 1, 2001—Jun. 30, 2001 7% 19 573 8% 21 575

Jul. 1, 2001—Sep. 30, 2001 6% 17 571 7% 19 573

Oct. 1, 2001—Dec. 31, 2001 6% 17 571 7% 19 573

Jan. 1, 2002—Mar. 31, 2002 5% 15 569 6% 17 571

Apr. 1, 2002—Jun. 30, 2002 5% 15 569 6% 17 571

TABLE OF INTEREST RATES FOR

LARGE CORPORATE UNDERPAYMENTS

FROM JANUARY 1, 1991 - PRESENT

1995–1 C.B.

RATE TABLE PAGE

Jan. 1, 1991—Mar. 31, 1991 13% 31 585

Apr. 1, 1991—Jun. 30, 1991 12% 29 583 Jul. 1, 1991—Sep. 30, 1991 12% 29 583

Oct. 1, 1991—Dec. 31, 1991 12% 29 583 Jan. 1, 1992—Mar. 31, 1992 11% 75 629 Apr. 1, 1992—Jun. 30, 1992 10% 73 627

Jul. 1, 1992—Sep. 30, 1992 10% 73 627 Oct. 1, 1992—Dec. 31, 1992 9% 71 625 Jan. 1, 1993—Mar. 31, 1993 9% 23 577 Apr. 1, 1993—Jun. 30, 1993 9% 23 577 Jul. 1, 1993—Sep. 30, 1993 9% 23 577

Oct. 1, 1993—Dec. 31, 1993 9% 23 577 Jan. 1, 1994—Mar. 31, 1994 9% 23 577 Apr. 1, 1994—Jun. 30, 1994 9% 23 577

Jul. 1, 1994—Sep. 30, 1994 10% 25 579 Oct. 1, 1994—Dec. 31, 1994 11% 27 581 Jan. 1, 1995—Mar. 31, 1995 11% 27 581

March 25, 2002 641 2002–12 I.R.B.

TABLE OF INTEREST RATES FOR LARGE CORPORATE UNDERPAYMENTS FROM JANUARY 1, 1991 - PRESENT—CONTINUED

1995–1 C.B. RATE TABLE PAGE Apr. 1, 1995—Jun. 30, 1995 12% 29 583 Jul. 1, 1995—Sep. 30, 1995 11% 27 581 Oct. 1, 1995—Dec. 31, 1995 11% 27 581 Jan. 1, 1996—Mar. 31, 1996 11% 75 629 Apr. 1, 1996—Jun. 30, 1996 10% 73 627 Jul. 1, 1996—Sep. 30, 1996 11% 75 629 Oct. 1, 1996—Dec. 31, 1996 11% 75 629 Jan. 1, 1997—Mar. 31, 1997 11% 27 581 Apr. 1, 1997—Jun. 30, 1997 11% 27 581

Jul. 1, 1997—Sep. 30, 1997 11% 27 581

Oct. 1, 1997—Dec. 31, 1997 11% 27 581

Jan. 1, 1998—Mar. 31, 1998 11% 27 581

Apr. 1, 1998—Jun. 30, 1998 10% 25 579

Jul. 1, 1998—Sep. 30, 1998 10% 25 579

Oct. 1, 1998—Dec. 31, 1998 10% 25 579

Jan. 1, 1999—Mar. 31, 1999 9% 23 577

Apr. 1, 1999—Jun. 30, 1999 10% 25 579

Jul. 1, 1999—Sep. 30, 1999 10% 25 579

Oct. 1, 1999—Dec. 31, 1999 10% 25 579

Jan. 1, 2000—Mar. 31, 2000 10% 73 627

Apr. 1, 2000—Jun. 30, 2000 11% 75 629

Jul. 1, 2000—Sep. 30, 2000 11% 75 629

Oct. 1, 2000—Dec. 31, 2000 11% 75 629

Jan. 1, 2001—Mar. 31, 2001 11% 27 581

Apr. 1, 2001—Jun. 30, 2001 10% 25 579 Jul. 1, 2001—Sep. 30, 2001 9% 23 577

Oct. 1, 2001—Dec. 31, 2001 9% 23 577 Jan. 1, 2002—Mar. 31, 2002 8% 21 575 Apr. 1, 2002—Jun. 30, 2002 8% 21 575

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000

FROM JANUARY 1, 1995 - PRESENT

1995–1 C.B. RATE TABLE PAGE

Jan. 1, 1995—Mar. 31, 1995 6.5% 18 572 Apr. 1, 1995—Jun. 30, 1995 7.5% 20 574 Jul. 1, 1995—Sep. 30, 1995 6.5% 18 572

Oct. 1, 1995—Dec. 31, 1995 6.5% 18 572

2002–12 I.R.B. 642 March 25, 2002

TABLE OF INTEREST RATES FOR CORPORATE

OVERPAYMENTS EXCEEDING $10,000 FROM JANUARY 1, 1995 - PRESENT—CONTINUED

1995–1 C.B. RATE TABLE PAGE Jan. 1, 1996—Mar. 31, 1996 6.5% 66 620 Apr. 1, 1996—Jun. 30, 1996 5.5% 64 618 Jul. 1, 1996—Sep. 30, 1996 6.5% 66 620 Oct. 1, 1996—Dec. 31, 1996 6.5% 66 620 Jan. 1, 1997—Mar. 31, 1997 6.5% 18 572 Apr. 1, 1997—Jun. 30, 1997 6.5% 18 572 Jul. 1, 1997—Sep. 30, 1997 6.5% 18 572 Oct. 1, 1997—Dec. 31, 1997 6.5% 18 572 Jan. 1, 1998—Mar. 31, 1998 6.5% 18 572 Apr. 1, 1998—Jun. 30, 1998 5.5% 16 570

Jul. 1. 1998—Sep. 30, 1998 5.5% 16 570

Oct. 1, 1998—Dec. 31, 1998 5.5% 16 570

Jan. 1, 1999—Mar. 31, 1999 4.5% 14 568

Apr. 1, 1999—Jun. 30, 1999 5.5% 16 570

Jul. 1, 1999—Sep. 30, 1999 5.5% 16 570

Oct. 1, 1999—Dec. 31, 1999 5.5% 16 570

Jan. 1, 2000—Mar. 31, 2000 5.5% 64 618

Apr. 1, 2000—Jun. 30, 2000 6.5% 66 620

Jul. 1, 2000—Sep. 30, 2000 6.5% 66 620

Oct. 1, 2000—Dec. 31, 2000 6.5% 66 620

Jan. 1, 2001—Mar. 31, 2001 6.5% 18 572

Apr. 1, 2001—Jun. 30, 2001 5.5% 16 570

Jul. 1, 2001—Sep. 30, 2001 4.5% 14 568

Oct. 1, 2001—Dec. 31, 2001 4.5% 14 568

Jan. 1, 2002—Mar. 31, 2002 3.5% 12 566

Apr. 1, 2002—Jun. 30, 2002 3.5% 12 566

March 25, 2002 643 2002–12 I.R.B.