Internal Revenue Bulletin: 2006-5
January 30, 2006
LIFO; price indexes; department stores. The November 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, November 30, 2005.
Final regulations under section 1374 of the Code provide that (a) section 1374(d)(8) applies to any transaction described in that section that occurs on or after December 27, 1994, regardless of the date of the S corporation’s election under section 1362; and (b) for purposes of section 633(d)(8) of the Tax Reform Act of 1986, as amended, a corporation’s most recent S election, not an earlier election that has been revoked or terminated, determines whether or not it is subject to current section 1374.
Proposed regulations under section 168 of the Code provide guidance on the normalization requirements applicable to public utilities that benefit (or have benefited) from accelerated depreciation methods or from the investment tax credit permitted under pre-1999 law. The regulations permit a utility whose assets cease to be public utility property to return to its ratepayers the normalization reserve for excess deferred income taxes (EDFIT) with respect to those assets and, in certain circumstances, also permit the return of part or all of the reserve for accumulated deferred investment tax credits (ADITC) with respect to those assets. A public hearing is scheduled for April 5, 2006.
This document notifies taxpayers and material advisors of a future change to the categories of reportable transactions under proposed section 1.6011-4 of the regulations. The Service and Treasury Department will be issuing temporary and proposed regulations under section 1.6011-4 that will remove from the categories of reportable transactions under section 1.6011-4(b)(1) the category of transactions with a significant book-tax difference currently set forth in section 1.6011-4(b)(6). Until the amended regulations are issued, taxpayers and material advisors may rely on this notice.
Hurricane Katrina evacuation allowances. This notice discusses the income and employment tax treatment of special allowances paid by federal executive agencies to employees and their dependents to reimburse certain expenses incurred while evacuating from the Hurricane Katrina core disaster area and staying at a safe haven.
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