Rev. Rul. 55-426

It was announced in Internal Revenue Bulletin 1955-6, 6, that Revenue Ruling 54-608, C.B. 1954-2, 8 (relating to the accrual of vacation pay), was amended so that the ruling would be applied only to taxable years ending on or after June 30, 1955. The Revenue Ruling was amended to afford taxpayers time to consider its effect, particularly for determining whether to elect to establish reserves for estimated expenses under section 462 of the Internal Revenue Code of 1954. On June 15, 1955, section 462 was repealed by Public Law 74 (84th Cong.), for all taxable years to which the 1954 Code applies. In order to afford taxpayers a reasonable time to consider the effect of the repeal, particularly for determining whether the accrual of vacation pay will be allowable under Revenue Ruling 54-608, supra , such ruling will be applied only to taxable years ending after December 31, 1955.

Accordingly, the last paragraph of Revenue Ruling 54-608, supra, is hereby amended and as amended will read as follows:

I.T. 3956, supra , is hereby revoked, and G.C.M. 25261, supra, is modified to the extent that it is inconsistent with the views expressed herein. However, under the authority of sections 3791(b) of the 1939 Code and 7805(b) of the 1954 Code, such revocation and modification will not be applicable with respect to taxable years ending prior to January 1, 1956.

¹ This date has been extended to July 1, 1956. See Announcement, I.R.B. 1955-52, p. 9