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and the appraisal in the promotional materials was unreasonable.
The record does not establish an abuse of discretion on the part
of respondent but supports respondent's position. We hold that
respondent's refusal to waive the section 6659 addition to tax is
not an abuse of discretion. Petitioners are liable for the
section 6659 addition to tax at the rate of 30 percent of the
underpayment of tax attributable to the disallowed credits for
1981. Respondent is sustained on this issue.
Issue 3. Sec. 6621(c) Tax Motivated Transactions
Respondent determined that interest on deficiencies accruing
after December 31, 1984, would be calculated under section
6621(c). The annual rate of interest under section 6621(c)
equals 120 percent of the interest payable under section 6601
with respect to any substantial underpayment attributable to tax-
motivated transactions. An underpayment is substantial if it
exceeds $1,000. Sec. 6621(c)(2).
The term "tax motivated transaction" includes "any sham or
fraudulent transaction." Sec. 6621(c)(3)(A)(v). In this case,
petitioners stipulated that the Hyannis transaction lacked
economic substance. Transactions devoid of economic substance
are sham transactions for purposes of section 6621(c)(3)(A)(v).
Friendship Dairies, Inc. v. Commissioner, 90 T.C. 1054, 1068
(1988); Cherin v. Commissioner, 89 T.C. 986, 1000 (1987).
Therefore, by definition the Hyannis transaction is tax motivated
under section 6621(c)(3)(A)(v). Moreover, the term "tax
motivated transaction" includes any section 6659(c) valuation
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