- 9 -
affg. T.C. Memo. 1991-179; Antonides v. Commissioner, 91 T.C.
686, 699 (1988), affd. 893 F.2d 656 (4th Cir. 1990). A return
position that has a reasonable basis within the meaning of
section 1.6662-3(b)(3), Income Tax Regs., is not attributable to
negligence. Sec. 1.6662-3(b)(1), Income Tax Regs. The meaning
of the term “reasonable basis” is set forth in section 1.6662-
3(b)(3), Income Tax Regs., as follows:
Reasonable basis is a relatively high standard of tax
reporting, that is, significantly higher than not
frivolous or not patently improper. The reasonable
basis standard is not satisfied by a return position
that is merely arguable or that is merely a colorable
claim. If a return position is reasonably based on one
or more of the authorities set forth in �1.6662-
4(d)(3)(iii) (taking into account the relevance and
persuasiveness of the authorities, and subsequent
developments), the return position will generally
satisfy the reasonable basis standard even though it
may not satisfy the substantial authority standard as
defined in �1.6662-4(d)(2). (See �1.6662-4(d)(3)(ii)
for rules with respect to relevance, persuasiveness,
subsequent developments, and use of a well-reasoned
construction of an applicable statutory provision for
purposes of the substantial understatement penalty.)
In addition, the reasonable cause and good faith excep-
tion in �1.6664-4 may provide relief from the penalty
for negligence or disregard of rules or regulations,
even if a return position does not satisfy the reason-
able basis standard.
A return position that does not have a reasonable basis is
attributable to negligence. Van Camp & Bennion v. United States,
251 F.3d 862, 866 (9th Cir. 2001).
For purposes of section 6662(b)(2), there is a substantial
understatement of tax for any taxable year if the amount of the
understatement for the taxable year exceeds the greater of 10
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