- 20 -
so stringent that a taxpayer’s treatment must be one that is
ultimately upheld in litigation or that has a greater than
50-percent likelihood of being sustained in litigation. Sec.
1.6662-4(d)(2), Income Tax Regs. 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. See sec. 1.6662-4(d)(3)(ii),
Income Tax Regs. There may be substantial authority for more
than one position with respect to the same item. Sec.
1.6662-4(d)(3)(i), Income Tax Regs.
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
and in good faith depends on the pertinent facts and circum-
stances, including the taxpayer’s efforts to assess such tax-
payer’s proper tax liability, the knowledge and experience of the
taxpayer, and the reliance on the advice of a professional, such
as an accountant. Sec. 1.6664-4(b)(1), Income Tax Regs.
We have (1) sustained the determinations in the notice that
gave rise to the deficiency that respondent determined22 and
22Those determinations include a determination to disallow
the nonpassive loss of $103,150 from Mr. Hopkins’s S Corporation
that petitioners claimed in petitioners’ Schedule E. That
(continued...)
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011