Roger prepared for compensation a Federal income tax return for Mona.Mona's return included an aggressive interpretation of the rules concerning overnight business travel.Roger is not liable for a preparer penalty for taking an unreasonable tax return position if:

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Roger is not liable for a preparer penalty if there was a reasonable basis for Mona's interpretation of the travel deduction rules, and Mona disclosed the position in an attachment to the return. This shows that Roger acted in good faith and complied with the requirements of the law. Option A is incorrect because the amount of the tax reduction is not the determining factor for whether a preparer penalty is applied. Option B is incorrect because Mona's penalty does not absolve Roger of any penalty as a preparer. Option D is incorrect because if the IRS found the travel deduction to be frivolous, then there would not be a reasonable basis for Mona's interpretation of the travel deduction rules.

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