Or. Admin. R. 150-314-0209 - Substantial Authority, Adequate Disclosure and Reasonable Basis

150-314-0209
Substantial Authority, Adequate Disclosure and Reasonable Basis

(1) Definitions. For purposes of ORS 314.402, OAR 150-314-0205, and this rule:

(a) “Substantial authority” has the same meaning as used in Treasury Regulation 1.6662-4(d).

(b) “Adequate disclosure” has the same meaning as used in Treasury Regulation 1.6662-4(e)-(f).

(c) “Reasonable basis” has the same meaning as used in Treasury Regulation 1.6662-3(b)(3).

(2) When determining if an understatement is substantial, the understatement does not include items for which:

(a) Substantial authority exists (or existed at the time the taxpayer claimed it on the return) for the tax treatment of the item in question; or

(b) The taxpayer adequately disclosed relevant facts for the tax treatment of the item in question on the Oregon return (or on a statement attached to the Oregon return), and the taxpayer had a reasonable basis for the tax treatment of the item.

(3) Items not adequately disclosed to the department before the taxpayer was first notified by the department concerning the tax liability will not be considered adequately disclosed on any subsequent filing by the taxpayer.

(4) Items attributable to an abusive tax shelter as defined in ORS 314.402(4)(a) do not qualify under this rule to be excluded from the understatement.