HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

SPECIAL ANNOUNCEMENT

Announcement 2006–87, page 822. This announcement for the 2007 IRS Individual e-file Partnership Program solicits applications from potential partners for participation in the program. The partnership opportunities are a result of RRA ’98 which requires the IRS to receive 80 percent of all returns electronically by 2007. RRA ’98 authorized the IRS Commissioner to promote the benefits of and encourage the use of e-file products and services through partnerships with various entities that offer low cost tax preparation and electronic filing of individual income tax returns for qualified taxpayers. Those applicants that are accepted as partners will have a link(s) and description(s) of their products and services posted to www.irs.gov (Partners Page).

INCOME TAX

Rev. Rul. 2006–53, page 796. LIFO; price indexes; department stores. The August 2006 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, August 31, 2006.

REG–140379–02; REG–142599–02, page 808. Generally, interest on a state or local bond is excluded from gross income. However, the exclusion does not apply to a private activity bond unless the bond is a qualified bond. Proposed regulations under sections 141 and 145 of the Code provide general rules on the allocation of and accounting for bond proceeds for purposes of the private activity bond restrictions which apply to tax-exempt governmental bonds. Special rules

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