InterTAN, Inc. - Page 24

                                       - 24 -                                         
          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.                            
               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           

Page:  Previous  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  Next

Last modified: May 25, 2011