- 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