- 18 -
As previously discussed, petitioners' efforts to assess
their proper income tax liability consisted of their reliance
upon the promotional materials and their discussions with
Lukensow. It is clear that they did not make the kind of factual
or legal analysis of the GD&L container leasing program that
would enable them to formulate any reasonable belief one way or
another as to whether the tax treatment they gave to their
claimed deductions and ITC was more likely than not the proper
treatment. Having concluded that petitioners' reliance on
Lukensow and the promotional materials was neither reasonable nor
in good faith, it follows that no reduction of the understatement
is available and that respondent did not abuse her discretion in
declining to waive the addition to tax under section 6661(a).
Accordingly, respondent's determination with respect to this
issue is sustained.
Section 6621(c) Increased Rate of Interest
Section 6621(c) provides for an increased interest rate with
respect to any "substantial underpayment" (greater than $1,000)
in any taxable year "attributable to 1 or more tax motivated
transactions". The increased rate of interest applies as of
December 31, 1984, even though the transaction was entered into
prior to the enactment of the statute. Solowiejczyk v.
Commissioner, 85 T.C. 552 (1985), affd. without published opinion
795 F.2d 1005 (2d Cir. 1986). The term "tax motivated
transaction" includes any "sham or fraudulent transaction". Sec.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011