| A taxpayer’s accuracy-related penalty due to disregard of rules and regulations, or substantial understatement of income tax, may be avoided if the return position is adequately disclosed and has a reasonable basis. Generally, the penalty is equal to 20% of the underpayment. Substantial understatement of income tax occurs when the understatement is more than the larger of 10% of the correct tax or $5,000 |
| A taxpayer’s accuracy-related penalty due to disregard of the rules and regulations or substantial understatement of income tax may be avoided if the return position is adequately disclosed and has a reasonable basis. Positions concerning tax shelters may result in or increase an accuracy-related penalty. |
Tax Position
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