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at the time they claimed the relevant loss. However, their
reliance on section 174, standing alone, does not provide the
substantial authority required under section 6661 and
accompanying regulations. Petitioners have failed to show that
substantial authority existed for the tax treatment of the Blythe
II loss on their 1982 return.
Adequate disclosure of the tax treatment of a particular
item may be made either in a statement attached to the return, or
on the return itself, if it is in accordance with the
requirements of Rev. Proc. 83-21, 1983-1 C.B. 680. See sec.
1.6661-4(b) and (c), Income Tax Regs. The record indicates that
petitioners did not attach a statement to their 1982 return
disclosing the specific facts surrounding their Blythe II loss
deduction. Rev. Proc. 83-21, supra, applicable to tax returns
filed in 1983, lists information that would be deemed sufficient
disclosure if listed on the return itself, without the necessity
of attaching an additional statement to the return. However,
none of the specific tax items referenced in Rev. Proc. 83-21 are
relevant to the instant cases. If disclosure is not made in
compliance with the regulations or the revenue procedure,
adequate disclosure on the return may still be satisfied if
sufficient information is provided to enable respondent to
identify the potential controversy involved. See Schirmer v.
Commissioner, 89 T.C. 277, 285-286 (1987). Petitioners appear to
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