How it works
Confidence levels in tax opinions are a ladder. Will means near certainty (roughly 90 percent or more). Should means a high likelihood (around 70 percent). More likely than not means greater than 50 percent. Substantial authority is lower, roughly 40 percent, and reasonable basis lower still. The level is stated in the letter and drives its legal effect: more-likely-than-not is the level generally required to avoid penalties on positions involving reportable transactions, and it is the level many preparers require before signing a return with an unusual position.
Why it matters
The level is a legal conclusion with consequences, not a stylistic choice, and a reasoned analysis must support it.
Example
Counsel concludes that a client’s crypto theft loss is more likely than not deductible under Section 165(c)(2) based on the 2025 Chief Counsel guidance and the client’s documentation. The preparer takes the deduction, and the opinion is in the file if the IRS asks.
Related: opinion letter. Read more: tax opinion letters.
