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section 6662(d)(2)(B)(ii). Under Revenue Procedure 94-69, a
qualifying taxpayer may submit a statement to the IRS which will
qualify as adequate disclosure under section 6662(d)(2)(B)(ii)
and the regulations thereunder if, inter alia, the statement
discloses “information that reasonably may be expected to apprise
the Internal Revenue Service of the identity of the item, its
amount, and the nature of the controversy or potential contro-
versy.” Rev. Proc. 94-69, sec. 3.02(2), 1994-2 C.B. at 806.
If the disputed transaction is a tax shelter within the
meaning of section 6662(d)(2)(C)(ii), a taxpayer may not avoid
liability for the accuracy-related penalty by adequately disclos-
ing the transaction in question. Sec. 6662(d)(2)(C)(i)(I).
Moreover, in the case of a tax shelter, in order to avoid liabil-
ity for the accuracy-related penalty, a taxpayer not only must
demonstrate that there is or was substantial authority for the
tax return treatment of the transaction in question, but also
must prove that it reasonably believed that that treatment is
more likely than not the proper treatment. Sec.
6662(d)(2)(C)(i)(II).
The accuracy-related penalty under section 6662(a) does not
apply to any portion of an underpayment if it is shown that there
was reasonable cause for, and that the taxpayer acted in good
faith with respect to, such portion. Sec. 6664(c)(1). The
determination of whether the taxpayer acted with reasonable cause
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