-58-
552, 555-557 (1985), affd. without published opinion 795 F.2d 1005
(2d Cir. 1986). An underpayment is substantial if it exceeds
$1,000. Sec. 6621(c)(2). The phrase “tax-motivated transactions”
includes straddles and transactions lacking a profit motive. See
Ewing v. Commissioner, 91 T.C. at 422-423.
We have concluded that petitioner and Mr. Illingworth formed
Tandrill for the purpose of generating tax benefits. Moreover, the
$1,000 statutory threshold is surpassed in this case for both
taxable years in issue. Consequently, petitioners’ underpayments
based on the losses attributable to tax-motivated transactions are
subject to the additional interest provided by section 6621(c). We
hold that petitioners are liable for the increased rate of interest
under section 6621(c) on the entire underpayments for 1976 and 1980.
To reflect the foregoing,
Decision will be
entered under Rule 155.
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