To avoid the substantial understatement penalty by adequate disclosure, you must properly disclose the position on the tax return and there must at least be a reasonable basis for the position. To properly disclose the position, complete and attach IRS Form 8275 to your tax return and disclose all relevant facts.
A reasonable basis is one that has approximately 10% or greater chance of success if challenged. This means that the position must be more than just arguable. There must be some authority supporting the position.