26 C.F.R. 1.6662-3 (eCFR current)

The record

Level

Legal authority

Authority

26 C.F.R. 1.6662-3 (eCFR current)

Issued

2026-09-26 Sept. 26, 2026

In force

Sept. 26, 2026 (no end date recorded; counted as in force for 120 days)

Character

regulation

Operative words

The substantial authority standard is an objective standard involving an analysis of the law and application of the law to relevant facts. The substantial authority standard is less stringent than the more likely than not standard... but more stringent than the reasonable basis standard as defined in sec. 1.6662-3(b)(3). The possibility that a return will not be audited or, if audited, that an item will not be raised on audit, is not relevant... (d)(2)... There may be substantial authority for more than one position with respect to the same item.... (d)(3)(i)... There may be substantial authority for the tax treatment of an item despite the absence of certain types of authority. Thus, a taxpayer may have substantial authority for a position that is supported only by a well-reasoned construction of the applicable statutory provision. (d)(3)(ii)... only the following are authority...: Applicable provisions of the Internal Revenue Code and other statutory provisions; proposed, temporary and final regulations construing such statutes; revenue rulings and revenue procedures; tax treaties...; court cases; congressional intent as reflected in committee reports...;... notices, announcements and other administrative pronouncements published by the Service in the Internal Revenue Bulletin (d)(3)(iii)... Reasonable basis is a relatively high standard of tax reporting, that is, significantly higher than not frivolous or not patently improper.... If a return position is reasonably based on one or more of the authorities set forth in sec. 1.6662-4(d)(3)(iii)..., the return position will generally satisfy the reasonable basis standard even though it may not satisfy the substantial authority standard (1.6662-3(b)(3))

Notes