Mikel prepared for compensation a Federal income tax return for Mona.Mona's return included an aggressive interpretation of the rules concerning the home office deduction.Mikel is not liable for a preparer penalty for taking an unreasonable tax return position if:

Question

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Mikel will not be liable for preparer penalty if he had a reasonable basis for Mona's interpretation of the home office deduction rules and Mona disclosed this position in an attachment to the return. A is incorrect because the amount of tax reduction does not determine the liability of preparer penalty. B is incorrect because Mona's penalty does not relieve Mikel of his penalty. C is incorrect as the IRS finding the deduction frivolous does not necessarily absolve Mikel of the preparer penalty.

Mikel Prepared for Compensation a Federal Income Tax Return for Mona.Mona's