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Correspondence Letter

 December 5, 2005

 Via EDGAR & Federal Express

 Michael Moran

 Accounting Branch Chief

 Division of Corporation Finance

 Mail Stop 3561

 United States Securities and Exchange Commission

 Washington, D.C. 20840

 Re:   The Gap, Inc. File
No. 1-7562

 Dear Mr. Moran:

 Thank you for your letter dated November 8, 2005. As Chief Financial
Officer of The Gap, Inc. (the company), I am responsible for our financial reporting and financial filings. Therefore, I am responding to your letter in place of the addressee, Paul Pressler, our President and Chief Executive Officer. We have
repeated your comments 1 through 10 below and have responded to each comment with the additional information requested and where necessary with the actions we propose to take in our future filings.

 FORM 10-K FOR THE YEAR ENDED JANUARY 29, 2005

 Part IV, page 12

 Item 15-Exhibits and Financial
Statement Schedules, page 12

 Report of Independent Registered
Public Accounting Firm, page 40

1.
Electronic submissions are required to contain signatures in typed form rather than manual format. See Rule 302(a) of Regulation S-T. Please revise the report of your
independent public accounting firm in future filings to include “/s/” to represent the electronic signature.

 Our Response

•

In future filings, we will revise the report of our independent public accounting firm to include “/s/” to represent the electronic signature.

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 2

 Consolidated Balance Sheets, page 42

2.
As of your balance sheet dates please tell us the amounts due from credit card, debit card and electronic benefit transfer transactions and where these amounts are classified
in your consolidated balance sheets and statements of cash flow. Include a discussion of your accounting policy for these transactions and the applicable accounting guidance.

 Our Response

•

The amounts in-transit from banks for customer credit card, debit card and electronic benefit transfer (EBT) transactions were $66 million and $71 million at January 29, 2005
and January 31, 2004, respectively.

•

These in-transit amounts have been classified and included in the “cash and equivalents” balance of $2,245 million and $2,261 million in our consolidated balance sheets
and statements of cash flows at January 29, 2005 and January 31, 2004, respectively. These amounts represent approximately 3% of total cash and equivalents and 0.7% of total assets at both January 29, 2005 and January 31, 2004.
Therefore, separate presentation of these amounts in our consolidated balance sheets is not required in accordance with Regulation S-X Rule 5-02 paragraph 8, “State separately, in the balance sheet or in a note thereto, any amounts in excess of
five percent of total current assets.”

•

Our accounting policy states that amounts in-transit from banks for customer credit card, debit card and EBT transactions that process in less than seven days are considered cash
equivalents and are therefore classified as “cash and equivalents” in our consolidated balance sheet. The banks process the majority of these amounts within one to two business days. In future filings we will disclose this classification
under Cash and Equivalents in Note A. Summary of Significant Accounting Policies.

•

We believe this accounting policy is consistent with the concepts outlined in SFAS 95, which defines cash equivalents as “short-term, highly liquid investments that are both
(a) readily convertible to known amounts of cash; and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates”. We do not believe that we are exposed to valuation risks
(such as customer credit risk) because authorization for these transactions is obtained from the banks at the point of sale to the customer. Consequently, these amounts are readily convertible to a known amount of cash at that time. Furthermore, we
believe the processing time frame presents insignificant risk to changes in value.

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 3

 Consolidated Balance Sheets, page 42

3.
Please tell us why you present a subtotal for cash and cash equivalents, short-term investments and restricted cash in your consolidated balance sheets. Include in your
response why this is a meaningful segregation within the classification of current assets and if this is supportable by any authoritative accounting guidance. If after further consideration you decide to revise future annual and interim filings to
exclude this subtotal, please state so in your response.

 Our Response

•

We began to present the subtotal for cash and equivalents, short-term investments, and restricted cash in our August 2, 2003 10-Q, as we believed this was a meaningful measure
to our investors. At that time, we had a significant amount of debt, and we believed this segregation provided investors with an understanding of our cash position relative to our debt levels and also visibility to our liquidity.

•

After further consideration of our current financial condition and the authoritative literature, we will revise our future annual and interim filings to exclude this subtotal.

 Consolidated Balance Sheets, page 42

4.
Please advise or revise your future filings to include a disclosure listing the components of accrued expenses and other liabilities as of the dates of your consolidated
balance sheets. Please provide us with an example of this revised disclosure in your response.

 Our Response

•

Accrued expenses and other current liabilities are comprised of various items. We review accrued expenses and other current liabilities on a regular basis and apply Regulation S-X
Rule 5-02 paragraph 20, which requires us to “State separately, in the balance sheet or in a note thereto, any item in excess of 5 percent of total current liabilities.” Please refer to Note A. Summary of Significant Accounting
Policies—Accrued Liabilities, in which we have disclosed accrued payroll and benefits of $123 million and $118 million at January 29, 2005 and January 31, 2004, respectively. No other individual accrual item at January 29, 2005
or January 31, 2004 is in excess of the 5% threshold.

•

In addition, we disclose certain other amounts that are included in the accrued expenses and other current liabilities balances that we believe are meaningful to the reader even
though they are less than 5% of total current liabilities. For example, please refer to Note E. Leases for our disclosure of the short-term deferred credit of approximately $82 million and $83 million at January 29, 2005 and January 31,
2004,

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 4

 respectively, which represented 4% and 3% of total current liabilities as of those dates. See also Note G. Derivative Financial Instruments for disclosure
of derivative liabilities totaling approximately $89 million at January 29, 2005, which represented 4% of total current liabilities as of that date. In future filings, we will clearly specify in the footnotes where these amounts are classified
in the balance sheets.

 Notes to Consolidated Financial Statements, page 46

 Note A: Summary of Significant Accounting Policies,
page 46

5.
Please tell us how you determined key money is a non-amortized indefinite life intangible asset and include any applicable accounting pronouncements to support this accounting
treatment. Also tell us if key money represents the rights to currently existing store leases or the right to enter into store leases in the future. Please address the term of the automatic renewal rights and also, tell us if the key money is
refundable or non-refundable and the conditions that would cause the amounts to become refundable, if applicable. Tell us what consideration you gave to treating the key money payments as prepaid rent.

 Our Response

 Overview

•

Due to the high demand for strategically located commercial properties in France, tenants are often obligated to pay an up-front amount as a condition for becoming a tenant; we call
this payment “key money”. Key money can be paid to either the landlord or to the previous tenant. Whether or not key money is paid at lease inception is dependent upon market conditions.

•

Articles L-145-1 and 145-60 of the French Commercial Code (“Articles”) govern commercial leases in France and provide certain rights that are highly protective of
tenants’ interests. These tenant rights are available to all tenants and are not dependent upon the payment of key money. However, in order to become a tenant and be able to take advantage of these rights under French law, key money generally
must be paid. Two significant rights are provided to the tenant under the Articles—1) right of renewal, including eviction indemnity and 2) right of assignment, as discussed below.

•

 The tenant is provided an indefinite automatic right of renewal as long as the tenant owns the business and such business has operated during the three-year period
preceding the renewal. The landlord may refuse to renew the lease; however the landlord would be required to pay an “eviction indemnity” equal to the loss sustained by the tenant as a result of the non-renewal. The eviction indemnity can
be economically prohibitive for landlords to disallow renewal, as it requires the landlord to compensate the tenant for a broadly defined loss associated with the non-renewal. We believe the marketplace behavior provides evidence that the deterrent
is effective;

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 5

 the eviction indemnity, in effect, allows tenants to remain in their properties for an indefinite period of time.

•

The tenant is also provided a right of assignment of the property, whereby the right to the lease can be transferred to another third-party, in certain instances without the
approval of the landlord. Depending on the market conditions, the tenant may receive key money from this third-party assignee.

•

Key money, in effect, is consideration for the ongoing, transferable rights associated with currently existing store leases. Key money is not refundable, however, in the event a
landlord refused to renew a lease, key money would likely be considered in the calculation of the eviction indemnity payment, or in the event we decide not to renew a store lease, we have the ability to sell the rights associated with the key money
to a third party.

 Accounting
Treatment

•

We have evaluated key money in accordance with paragraph 11 of SFAS 142, which states: “if no legal, regulatory, contractual, competitive, economic, or other factors limit the
useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite.” As there are no factors that limit the ongoing lease renewal rights associated with key money and therefore its
useful life, we have concluded that key money is a non-amortized indefinite life intangible asset. Key money provides a future economic benefit to us which generally appreciates in value through the passage of time. We believe the facts and
circumstances discussed above support our ability to continue to renew the underlying lease indefinitely, and we have the intent to do so, as long as we are a going concern.

•

Key money provides certain rights and benefits that are typically associated with land ownership and these rights are inseparable from the underlying property. As such, we believe
our treatment of key money as an indefinite life intangible asset is consistent with the basic concept that land is a non-depreciable asset.

•

We do not consider key money payments to represent prepaid rent. We do not believe key money payments relate to the use of the leased property, but rather are consideration for
certain “land ownership” rights provided to us through the rights of tenancy under the Articles. Our view is supported by the fact that key money payments are made to the holder of the rights of tenancy, which may be the previous tenant,
even though rent is paid to the landlord.

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 6

 Notes to Consolidated Financial Statements, page 46

 Note
A: Summary of Significant Accounting Policies, page 46

6.
In future filings please specifically address your accounting policies for catalog and direct response advertising within your advertising policy note. Please describe your
policy including your basis for capitalization, management’s assumptions for an expected life and tell us the amounts, if any, that remain on your consolidated balance sheets. Further, if you have capitalized costs, please advise and revise
your future filings to disclose the amounts reported as assets in each balance sheet. In your response please show us what your disclosure will look like revised.

 Our Response

•

Direct response advertising costs are applicable to our on-line business only. For the periods covered in our January 29, 2005 Form 10-K, we did not have a catalog business. We
have capitalized direct response advertising costs reported as “other current assets” of $1 million at both January 29, 2005 and January 31, 2004.

•

In accordance with SOP 93-7, our policy is to capitalize direct response advertising costs, including catalog advertising (if applicable), when the primary purpose of the
advertising is to elicit sales from customers who can be shown to have responded specifically to the advertising and the direct-response advertising results in probable future benefits.

•

Direct response advertising costs are amortized over the period for which the advertised merchandise is available for sale, which is generally three months.

•

We believe it would not be meaningful to disclose our policy on direct response advertising, as the amounts are not material to our consolidated financial statements. We will
consider the disclosure of such amounts capitalized in future filings if such disclosure would be meaningful.

 Notes to Consolidated Financial Statements, page 46

 Note A: Summary of Significant Accounting Policies, page 46

7.
We note the GapCard cardholders receive discounts and rewards in exchange for a prescribed amount of purchases. Please tell us how you account for the existing discounts and
reward arrangements and include any applicable accounting guidance to support your accounting treatment. Tell us where you classify the costs for these arrangements in your consolidated income statements and how much cost you recognized in each of
the three fiscal years ended 2004. Also tell us if management makes any subjective estimates to allocate the cost of honoring unearned discounts or rewards and the basis for developing these estimates.

 Mr. Michael Moran

 United States Securities and Exchange Commission

 Page 7

 Our Response

 Loyalty Program Overview

•

Holders of our private label credit card (PLCC) participate in our loyalty program. The program is designed to award “loyalty points” to customers who purchase merchandise
using our PLCC. Points are accumulated and, upon achieving a prescribed point-level, the customer receives “loyalty coupons” that are redeemable in the future for merchandise. The loyalty coupons are not redeemable for cash.

 Loyalty Program Accounting
Policy

•

For the fiscal year ended February 1, 2003, we recorded the cost associated with the loyalty program in the period that the coupon was redeemed by the customer. For the fiscal
year ended February 1, 2003, we are unable to provide, at this time, the total cost of the loyalty program included in “cost of goods sold and occupancy expenses” in our consolidated statement of operations as these transactions were
recorded in our previous point-of-sale (“POS”) system and we are currently unable to obtain this data f