CPA prepares a tax return for Client. Client's return includes a deduction that is contrary to an extant Revenue Ruling. Because of a recent court decision in another circuit that is favorable to the deduction, CPA believes that there is a 60 percent chance that the deduction would prevail if the Client's return was audited. What potential preparer penalties would be applicable if the deduction was challenged?

Group of answer choices

No preparer penalties should be assessed regardless of whether the position was upheld in court.

CPA would be subject to the Understatement Due to an Unreasonable Position penalty if Client loses in court.

CPA would be subject to the Understatement Due to an Unreasonable Position penalty if Client wins or loses in court.

CPA wold be subject to the Willful Understatement penalty if Client loses in court because a preparer cannot take a position contrary to a Revenue Ruling.