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

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

LIFO; price indexes; department stores. The May 2003 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, May 31, 2003.

Rev. Rul. 2003–87

The following Department Store Inventory Price Indexes for May 2003 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, May 31, 2003.

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 May 2002 May 2003

Percent Change from May 2002

to May 2003 ¹

1. Piece Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490.1 456.3 -6.9
2. Domestics and Draperies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586.9 557.6 -5.0
3. Women's and Children's Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647.5 637.0 -1.6
4. Men's Shoes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 924.6 855.8 -7.4
5. Infants' Wear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614.9 599.6 -2.5
6. Women's Underwear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542.9 519.8 -4.3
7. Women's Hosiery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345.4 349.5 1.2
8. Women's and Girls' Accessories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558.0 550.2 -1.4
9. Women's Outerwear and Girls' Wear . . . . . . . . . . . . . . . . . . . . . . . . 386.7 374.5 -3.2
10. Men's Clothing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597.7 562.3 -5.9
11. Men's Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602.1 587.2 -2.5
12. Boys' Clothing and Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495.5 463.5 -6.5
13. Jewelry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901.3 877.9 -2.6
14. Notions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 797.6 789.7 -1.0
15. Toilet Articles and Drugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 975.0 979.7 0.5
16. Furniture and Bedding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626.4 620.2 -1.0
17. Floor Coverings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620.1 578.9 -6.6
18. Housewares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 758.4 730.9 -3.6
19. Major Appliances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220.7 213.7 -3.2
20. Radio and Television. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.4 45.9 -8.9

July 21, 2003 82 2003-29 I.R.B.

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

(January 1941 = 100, unless otherwise noted)

Groups May 2002 May 2003

Percent Change from May 2002

to May 2003 ¹

21. Recreation and Education ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.9 83.4 -4.0
22. Home Improvements ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125.4 126.1 0.6
23. Auto Accessories ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110.9 111.6 0.6

Groups 1–15: Soft Goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 586.0 568.1 -3.1 Groups 16–20: Durable Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413.1 397.1 -3.9 Groups 21–23: Misc. Goods ² . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96.8 94.7 -2.2

Store Total ³ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522.3 506.0 -3.1

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.

Situation A . The Service issues a Notice of Deficiency on or after Date 1 and before the termination of the automatic stay on Date 2.

Situation B . The Service issues a Notice of Deficiency less than 90 days before Date 1. Situation C . The Service issues a Notice of Deficiency 90 or more days before Date 1.

LAW AND ANALYSIS

Section 362 of title 11 of the United States Code (Bankruptcy Code) provides that certain acts are automatically stayed upon the filing of a bankruptcy petition. Section 362 does not stay the issuance of a Notice of Deficiency or the assessment of a tax by the Service. 11 U.S.C. § 362(b)(9)(B), (D). Section 362 does, however, stay the commencement or continuation of a Tax Court proceeding concerning the debtor. 11 U.S.C. § 362(a)(8). Pursuant to section 362(c)(2), the stay terminates upon the earliest of the time the bankruptcy case is closed, the time the case is dismissed, or the time a discharge is granted or denied.

Section 6501(a) of the Internal Revenue Code generally affords the Service three years from the time a return is filed to assess the tax for the return period. Under section 6503(a)(1) of the Internal Revenue Code, the running of the section 6501(a)

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 toll-free call).