- 57 -
2(c)(2), Income Tax Regs.22 Sec. 1.6662-7T(d)(2), Temporary
Income Tax Regs., 59 Fed. Reg. 12549 (Mar. 17, 1994). Because
Indeck had substantial authority for its treatment of $4,856,922
as deductible interest, we are satisfied that it also had a
reasonable basis under the applicable regulations and therefore
was not negligent, nor did it carelessly, recklessly, or
intentionally disregard any rule or regulation. Accordingly, we
do not sustain respondent’s determination of the accuracy-related
penalty based on negligence or disregard of rules of regulations.
To reflect the foregoing,
Decision will be entered under
Rule 155 in docket No. 21586-97.
Decision will be entered for
petitioners in docket No. 23943-97.
22 For Indeck’s taxable year ended in 1994, a definition of
“reasonable basis” was reserved in sec. 1.6662-3(b)(3), Income
Tax Regs. The definition was provided by subsequent amendment to
sec. 1.6662-3(b)(3), Income Tax Regs., applicable to returns
filed on or after Dec. 2, 1998. Sec. 1.6662-2(d)(4), Income Tax
Regs.
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