- 25 -
Section 6621(c)
Respondent also determined that petitioners are liable under
section 6621(c) for increased interest on all or a portion of
their tax deficiencies for all years in issue. Section 6621(c)
provides that increased interest is due if a "substantial
underpayment" is attributable to a "tax motivated transaction".
A "substantial underpayment" is an underpayment of more than
$1,000. Sec. 6621(c)(1). Deductions disallowed because an
activity was not engaged in for profit are deemed attributable to
a tax-motivated transaction. Sec. 301.6621-2T, Q&A-4, Temporary
Proced. & Admin. Regs., 49 Fed. Reg. 50392 (Dec. 28, 1984). We
have determined that the charter boat service was not entered
into for profit. Accordingly, we hold that Hans Hammann is
liable for the increased interest imposed by section 6621(c) with
respect to the entire amount of the deficiencies for the years
1980 and 1981. We further hold that petitioners are liable for
the increased interest imposed by section 6621(c) with respect to
the portions of the deficiencies for the remaining years in issue
attributable to the deductions disallowed because the charter
boat service was not conducted for profit.
To reflect the foregoing,
Decision will be entered
under Rule 155.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Last modified: May 25, 2011