- 42 -
sec. 13251, 107 Stat. 531. After the amendment, section
6662(d)(2)(B)(ii) provides as follows:
(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--
* * * * * * *
(ii) any item if--
(I) the relevant facts affecting
the item's tax treatment are adequately
disclosed in the return or in a state-
ment attached to the return, and
(II) there is a reasonable basis
for the tax treatment of such item by
the taxpayer.
Thus, in the case of returns for tax years 1993 and 1994,
the tax treatment of an item must be adequately disclosed
in the return or in an attached statement, and there must
be a reasonable basis for the tax treatment. Sec. 1.6662-
4(e) and (f), Income Tax Regs. The conference report
issued in connection with this amendment, H. Conf. Rept.
103-213, at 669 (1993), 1993-3 C.B. 393, 547, describes the
intent of the conferees concerning the meaning of the
phrase "reasonable basis" as follows:
The conferees intend that "reasonable basis" be a
relatively high standard of tax reporting, that
is, significantly higher than "not patently
improper." This standard is not satisfied by a
Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: May 25, 2011