This document provides notice of a public hearing on proposed regulations (REG-149335-08, 2011-6 I.R.B. 468) relating to the capitalization and allocation of royalties that are incurred only upon the sale of property produced or property acquired for resale (sales-based royalties) and adjusting the cost of merchandise inventory for an allowance, discount, or price rebated based on merchandise sales (sales-based vendor allowances). The regulations modify the simplified production method and the simplified resale method. A public hearing is scheduled for April 13, 2011.