Char-Lil Corporation - Page 43

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                  return position that is merely arguable or that                     
                  is merely a colorable claim.                                        

                  Furthermore, regulations promulgated under section                  
             6662, section 1.6662-4(f), Income Tax Regs., provide the                 
             following methods for making adequate disclosure:                        

                       (f) Method of making adequate disclosure--                     
                            (1) Disclosure statement.  Disclosure is                  
                       adequate with respect to an item (or group of                  
                       similar items, such as amounts paid or incurred                
                       for supplies by a taxpayer engaged in business)                
                       or a position on a return if the disclosure is                 
                       made on a properly completed form attached to                  
                       the return or to a qualified amended return (as                
                       defined in � 1.6664-2(c)(3)) for the taxable                   
                       year.  In the case of an item or position other                
                       than one that is contrary to a regulation,                     
                       disclosure must be made on Form 8275 (Disclosure               
                       Statement); in the case of a position contrary                 
                       to a regulation, disclosure must be made on                    
                       Form 8275-R (Regulation Disclosure Statement).                 
                            (2) Disclosure on return.  The Commis-                    
                       sioner may by annual revenue procedure (or                     
                       otherwise) prescribe the circumstances under                   
                       which disclosure of information on a return                    
                       (or qualified amended return) in accordance                    
                       with applicable forms and instructions is                      
                       adequate.  If the revenue procedure does not                   
                       include an item, disclosure is adequate with                   
                       respect to that item only if made on a                         
                       properly completed Form 8275 or 8275-R, as                     
                       appropriate, attached to the return for the                    
                       year or to a qualified amended return.                         

             During the years in issue, the annual revenue procedures                 
             issued pursuant to the above regulation did not include                  
             liability for personal holding company tax as an item with               
             respect to which disclosure could be made on a taxpayer's                



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Last modified: May 25, 2011