A Taxpayer Can Avoid a Substantial Understatement of Tax Penalty

question 37

Multiple Choice

A taxpayer can avoid a substantial understatement of tax penalty:

• A) if the position is frivolous and disclosed on the tax return.
• B) if the position has a realistic possibility of being sustained by the IRS or courts.
• C) if the position is not frivolous and disclosed on the tax return.
• D) if the position has a reasonable basis and is disclosed on the tax return.
• E) None of the choices are correct.

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Definitions:

Inborn Predisposition

Natural tendencies or inclinations present at birth that influence behavior, preferences, or susceptibilities.

Instinct

An innate, typically fixed pattern of behavior in animals in response to certain stimuli that is unlearned and often serves survival purposes.

Affiliation Motive

describes the psychological need to build relationships, feel connected, and interact with others, often driving social behavior and group membership.

Learning and Early Experience

Refers to how foundational experiences and the process of learning in early life shape behaviors and cognitive development.