INCOME TAX

Rev. Rul. 2005–63, page 603. LIFO; price indexes; department stores. The July 2005 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, 2005.

Rev. Rul. 2005–64, page 600. Interaction of sections 469 and 4261. This ruling describes the circumstances in which losses incurred by an individual who provides air transportation through a passthrough entity can qualify as passive losses under section 469 of the Code. In addition, this ruling describes the applicability of section 4261 to the amounts paid for the air transportation services.

REG–133578–05, page 610. Proposed regulations under section 162(k) of the Code provide guidance concerning which corporation is entitled to the deduction for applicable dividends under section 404(k) and also clarify that a payment in redemption of employer securities held by an ESOP is not deductible.

Notice 2005–61, page 607. This notice clarifies that employers that amend their cafeteria plans to provide a grace period for dependent care assistance may continue to rely on the safe harbor in Notice 89-111, 1989–2 C.B. 449, and report salary reduction amounts elected by an employee for a calendar year on Form W–2. Notice 89-111 amplified.

Finding Lists begin on page ii. Index for July through September begins on page v.