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asserts that at the time it filed its return for its taxable year
ended June 30, 1989, its use of the cash method in its asphalt
paving business was based upon substantial authority.
The standard of substantial authority requires that, when
the facts and authorities are analyzed with respect to the
taxpayer's case, the weight of the authorities that support the
taxpayer's position should be substantial when compared with
those supporting the contrary position. Sec. 1.6661-3(b)(1),
5(...continued)
(B) Special rule for corporations.--In the case of
a corporation other than an S corporation or a personal
holding company (as defined in section 542),
paragraph (1) shall be applied by substituting
"$10,000" for "$5,000".
(2) Understatement.--
(A) In general.--For purposes of
paragraph (1), the term, "Understatement"
means the excess of--
(i) the amount of the tax required
to be shown on the return for the
taxable year, over
(ii) the amount of tax imposed
which is shown on the return,
reduced by any rebate(within the
meaning of section 6211(b)(2)).
(B) Reduction for understatement due to
position of taxpayer or disclosed item.--The
amount of the understatement under subparagraph
(A) shall be reduced by that portion of the
understatement which is attributable to--
(i) the tax treatment of any item
by the taxpayer if there is or was
substantial authority for such
treatment, * * *
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