INCOME TAX

Rev. Rul. 2002–18, page 779. LIFO; price indexes; department stores. The February 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, February 28, 2002.

Rev. Rul. 2002–19, page 778. Medical expenses . Uncompensated amounts paid by individuals for participation in a weight-loss program as treatment for a specific disease or diseases (including obesity) diagnosed by a physician are expenses for medical care under section 213 of the Code. The cost of purchasing diet food items is not deductible under section 213. Rev. Ruls. 55–261 and 79–151 distinguished.

T.D. 8986, page 780 . Final regulations under section 705 of the Code provide guidance for making basis adjustments necessary to coordinate sections 705 and 1032 in situations in which a corporation acquires an interest in a partnership that holds stock in that corporation.

REG–165706–01, page 787. Proposed regulations modify the definition of a refunding issue under section 1.150–1(d) of the regulations in connection with a combination of section 501(c)(3) organizations. Generally, interest on bonds issued by state and local governments is excluded from gross income, however, this exclusion does not apply to certain refunding issues. A public hearing is scheduled for July 30, 2002.

Finding Lists begin on page ii.