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Sec. 6621(c)(1) and (2). The increased rate of interest applies
to interest accruing after December 31, 1984. See DeMartino v.
Commissioner, 88 T.C. 583, 589 (1987), affd. 862 F.2d 400 (2d
Cir. 1988), affd. without published opinion sub nom. McDonnell v.
Commissioner, 862 F.2d 308 (3d Cir. 1988) (the increased rate of
interest applies to interest accruing after December 31, 1984,
even though the transaction in question was entered into before
the date of enactment of section 6621(c)). Respondent determined
that petitioners were liable for the increased interest because
the underpayments for the taxable years at issue were
attributable to tax-motivated transactions.
Section 6621(c)(3)(A)(v) provides that the term "tax-
motivated transaction" includes "any sham or fraudulent
transaction." Economic shams, or transactions that lack economic
substance, fall within the ambit of section 6621(c)(3)(A)(v).
Patin v. Commissioner, 88 T.C. 1086, 1128-1129 (1987), affd.
without published opinion 865 F.2d 1264 (5th Cir. 1989), affd.
sub nom. Gomberg v. Commissioner, 868 F.2d 865 (6th Cir. 1989),
affd. sub nom. Skeen v. Commissioner, 864 F.2d 93 (9th Cir.
1989), affd. without published opinion sub nom. Hatheway v.
Commissioner, 856 F.2d 186 (4th Cir. 1988). The Court has
concluded that Series 162 was an economic sham. Accordingly,
respondent's determination that petitioners were liable for the
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