InterTAN, Inc. - Page 23

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          4(d)(3)(ii), Income Tax Regs.  An authority which is materially             
          distinguishable on its facts or otherwise inapplicable to the tax           
          treatment at issue is not particularly relevant and is not                  
          substantial authority.  Id.  There may be substantial authority             
          for the tax treatment of an item despite the absence of certain             
          types of authority.  Id.  Thus, a taxpayer may have substantial             
          authority for a position even where it is supported only by a               
          well-reasoned construction of the pertinent statutory provision             
          as applied to the relevant facts.  Id.                                      
               The amount of the understatement may also be reduced to the            
          extent that it is attributable to, inter alia, an item for which            
          the relevant facts affecting the item’s tax treatment were                  
          adequately disclosed in the return or in a statement attached to            
          the return.  Sec. 6662(d)(2)(B)(ii).  In order to satisfy the               
          adequate disclosure standard of section 6662(d)(2)(B)(ii), a                
          taxpayer must disclose the relevant facts on a properly completed           
          form (i.e., Form 8275, Disclosure Statement (Form 8275)) attached           
          to the return or to a qualified amended return.  Sec.                       
          1.6662-4(f)(1), Income Tax Regs.  In Revenue Procedure 94-69,               
          1994-2 C.B. 804 (Revenue Procedure 94-69), the Internal Revenue             
          Service (IRS) promulgated procedures under which certain taxpay-            
          ers15 may meet the requirements for adequate disclosure under               

               15The parties do not dispute that petitioner is the type of            
          taxpayer to which the rules of Revenue Procedure 94-69 apply.               

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Last modified: May 25, 2011