section 1.6694-2(b) of the proposed regulations

This section of the regulations requires the "analysis" prescribed under section 1.6662-4(d)(3)(ii) as well as the "authorities" described under (d)(3)(iii).

In order to avoid the penalties for undisclosed positions the tax return preparer must have a very technical analysis of the relevant authorities.

This is a change from Notice 2008-13 which did not address the (d)(3)(iii) authorities, although there was little doubt that Notice 2008-13 required that kind of analysis and technical support.

The tax preparation industry is in denial if it does not understand that there is no way to meet these technical requirements without a legal memorandum on the issues.

Common sense requires one to conclude that this analysis cannot be done at the time the 2008 tax returns are filed. The time and energy needed to prepare that technical memorandum is at the time when the factual and legally complex issues are identified.