A Taxpayer Can Avoid a Substantial Understatement of Tax Penalty

question 50

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 there is substantial authority to support the position.
• D)if the position has a reasonable basis and is not disclosed on the tax return.
• E)None of the choices are correct.

---

Definitions:

Inexpensive Mode

A cost-effective way or method of completing a task or process, often referring to transportation or production methods.

High Value

Items or services that are considered to be of great importance or worth, often commanding a high price in the market.

Disaggregate

To break down a large, complex data set or structure into smaller, more detailed parts.

Inventories

Quantities of goods or materials a company holds for the purpose of future sale or production.