Michael G. Bunney - Page 15

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          inputs into it.  Petitioner has not shown that any of the                   
          conceded issues were anything but the result of his own                     
          negligence or disregard of regulations.9                                    
               As to the contested adjustment, this Court has not                     
          previously addressed the issue of whether section 408(g)                    
          precludes recognition of a spouse’s community property interest             
          in allocating the taxability of an IRA distribution.  While we              
          find the text of section 408(g) to be clear and unambiguous on              
          its face, we bear in mind that the Commissioner has interpreted             
          section 408(g) administratively in a manner that is inconsistent            
          with our holding herein.  Under these circumstances, we conclude            
          that petitioner had a reasonable basis for his return position              
          that one-half of his IRA distributions were allocable to his                
          former spouse.10  Accordingly, we hold the negligence accuracy-             

               9Petitioner has claimed entitlement to an NOL carryback that           
          may eliminate some or all of the deficiency determined in this              
          case.  The parties have agreed to address this issue in the                 
          context of their Rule 155 computations.  Petitioner is liable for           
          the negligence accuracy-related penalty regardless of whether the           
          claimed NOL carryback eliminates the deficiency for the year.  A            
          loss in a later year does not reduce the underpayment for                   
          purposes of imposing the penalty.  See C.V.L. Corp. v.                      
          Commissioner, 17 T.C. 812, 816 (1951); McCauley v. Commissioner,            
          T.C. Memo. 1988-431; sec. 1.6664-2(f), Income Tax Regs.; see also           
          Estate of Trompeter v. Commissioner, 111 T.C. 57, 59-60 (1998),             
          and the cases cited therein.                                                
               10We note that for returns filed on or after Dec. 2, 1998,             
          respondent’s view is that a return position “reasonably based on            
          one or more of the authorities set forth in �1.6662-4(d)(3)(iii)            
          (taking into account the relevance and persuasiveness of the                
          authorities, and subsequent developments)” will generally satisfy           

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