A taxpayer can avoid a substantial understatement of tax penalty:. a) if the position has a reasonable basis and is not 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 is frivolous and disclosed on the tax return. e) None of the choices are correct.

e) None of the choices are correct.

Explanation:

A taxpayer can avoid a substantial underestimation of the tax penalty if there is a “reasonable cause” for the underpayment and the taxpayer performed “in good faith” with regard to the underpayment of the tax.

As IRC section 6662 forces a penalty 20% of an underpayment of tax if the underpayment is attributable to:  

1. A “basic estimation error,” with other things.  

2. a “substantial underestimation of income tax,” or              

3. oversight or disregard of rules or regulations,  

But no accuracy-related penalty implements for an underpayment if it is seen that there is “reasonable cause” for the underpayment and the taxpayer also behaved “in good faith” with regard to the underpayment of the tax.

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

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