The Tax Court, in its TC Memo 2014-21 decision, held that, although the taxpayer had read appropriate publication and the taxpayer followed the rules within IRS Publication 590, that the taxpayer still owed tax on an accuracy related penalty on tax which was due from the transaction.
The taxpayer a prominent tax lawyer sought reconsideration of the IRS’ determination due to the inappropriate guidance taken within the IRS publication. The court reminded the taxpayer that IRS publications are not considered authoritative guidance which may reduce penalties which are incurred.
If you have an advanced situation which requires technical assistance, please ask for a ‘covered opinion’ prior to undertaking the transaction. Appropriately prepared covered opinions issued by Enrolled Agents, CPAs or Attorneys will inoculate you against accuracy related penalties.