- 43 -
disclosure was adequate with respect to an item or a position on
a return only if it was made on Form 8275 or Form 8275-R attached
to the return or to a qualified amended return for the taxable
year. See Kelly v. Commissioner, T.C. Memo. 1996-529; sec.
1.6662-4(f)(1), Income Tax Regs.24
The disclosure petitioner made on his 1993 return did not
satisfy the regulations’ definition of an adequate disclosure
and, thus, is insufficient to avoid the accuracy-related penalty
under section 6662(a) and (b)(1). The regulations explicitly
state that an adequate disclosure statement for purposes of the
accuracy-related penalty as to negligence must be made on Form
8275 or Form 8275-R. See Kelly v. Commissioner, supra; sec.
1.6662-4(f)(1), Income Tax Regs. Petitioner did not attach a
Form 8275 or Form 8275-R to his 1993 return and, therefore,
24For returns due before Dec. 31, 1991, taxpayers were
entitled to rely on Notice 90-20, 1990-1 C.B. 328, which states
that “disclosure must be full and substantive and be clearly
identified as being made to avoid imposition of the accuracy-
related penalty.” See also Kelly v. Commissioner, T.C. Memo.
1996-529. Notice 90-20, supra, also provided that “The
disclosure must be made on the return or on a properly completed
Form 8275, Disclosure Statement Under Section 6661, attached to
the return.” Sec. 1.6662-4(f)(1), Income Tax Regs., in effect
for 1993, sets forth stricter requirements than those set forth
in Notice 90-20, supra, in order to avoid the imposition of the
accuracy-related penalty under sec. 6662(a) and (b)(1).
In addition, the provisions of sec. 1.6662-4(f)(2), Income
Tax Regs., which permit disclosure in accordance with an annual
revenue procedure for purposes of the substantial understatement
penalty, do not apply for purposes of the accuracy-related
penalty imposed for negligence. See sec. 1.6662-3(c)(2), Income
Tax Regs.
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