103 STAT. 2396 PUBLIC LAW 101-239—DEC. 19, 1989 "(A) IN GENERAL.—For purposes of paragraph (1), the term 'understatement' means the excess of— "(i) the amount of the tax required to be shown on the return for the taxable ye£u*, over "(ii) the amount of the tax imposed which is shown on the return, reduced by any rebate (within the mean- mg of section 6211(b)(2)). "(B) REDUCTION FOR UNDERSTATEMENT DUE TO POSITION OP TAXPAYER OR DISCLOSED ITEM.—The amount of the under- statement under subparagraph (A) shall be reduced by that portion of the understatement which is attributable to— "(i) the tax treatment of any item by the taxpayer if 'I there is or was substantial authority for such treat- ment, or "(ii) any item with respect to which the relevant facts ' affecting the item's tax treatment are adequately dis- closed in the return or in a statement attached to the return. "(C) SPECIAL RULES IN CASES INVOLVING TAX SHELTERS. — "(i) IN GENERAL.—In the case of any item attributable to a tax shelter— "(I) subparagraph (B)(ii) shall not apply, and "(II) subparagraph (B)(i) shall not apply unless (in addition to meeting the requirements of such subparagraph) the taxpayer reasonably believed that the tax treatment of such item by the tax- payer was more likely than not the proper treat- ment, "(ii) TAX SHELTER.—For purposes of clause (i), the term 'tax shelter* means— "(I) a partnership or other entity, "(II) any investment plan or arrangement, or "(III) any other plan or arrangement, if the principal purpose of such partnership, entity, plan, or arrangement is the avoidance or evasion of Federal income tax. "(D) SECRETARIAL LIST. —The Secretary shall prescribe (and revise not less frequently than annually) a list of positions— "(i) for which the Secretary believes there is not substantial authority, and "(ii) which affect a significant number of tfocpayers. Federal Such list (and any revision thereof) shall be published in Register, the Federal Register. publication. «(g) SUBSTANTIAL VALUATION OVERSTATEMENT UNDER CHAP- TER 1.— "(1) IN GENERAL.—For purposes of this section, there is a substantial valuation overstatement under chapter 1 if the value of any property (or the adjusted basis of any property) claimed on any return of tax imposed by chapter 1 is 200 percent or more of the amount determined to be the correct amount of such valuation or adjusted basis (as the case may be). "(2) LIMITATION.—No penalty shall be imposed by reason of subsection (b)(3) unless the portion of the underpayment for the taxable year attributable to substantial valuation overstate- ments under chapter 1 exceeds $5,000 ($10,000 in the case of a
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