Unreasonable tax return position

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Reference no: EM13132376

Roger prepared for compensation a Federal income tax return for Joan. Joan's return included an aggressive interpreation of the rules concerning overnight business travel. Roger is not liable for a preparer penalty for taking an unreasonable tax return position if:

a. Joan is assessed her own penalty for an understatement of tax due to disregard of IRS rules.

b. There was a resonable basis for Joan's interpreation of the travel deduction rules, and Joan disclosed the position in an attachment to the return.

c. The tax reduction attributable to the disputed deduction did not exceed $5,000.

d. The IRS found that the travel deduction was frivolous, but Joan disclosed the position in an attachment to the return.

Reference no: EM13132376

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