- 62 -
Golsen v. Commissioner, 54 T.C. 742, 756-758 (1970) affd. 445
F.2d 985 (10th Cir. 1971). In the Gilman case, the taxpayers
engaged in a computer equipment sale and leaseback transaction
that this Court held was a sham transaction lacking economic
substance. The taxpayers therein, citing Heasley v.
Commissioner, supra, and Todd v. Commissioner, supra, argued that
their underpayment of taxes derived from nonrecognition of the
transaction for lack of economic substance, independent of any
overvaluation. The Second Circuit Court of Appeals sustained
imposition of the section 6659 addition to tax because
overvaluation of the computer equipment contributed directly to
this Court's earlier conclusion that the transaction lacked
economic substance and was a sham. Gilman v. Commissioner, supra
at 151. In addition, the Second Circuit Court of Appeals agreed
with this Court and the Eighth Circuit Court of Appeals that
"'when an underpayment stems from disallowed * * * investment
credits due to lack of economic substance, the deficiency is * *
* subject to the penalty under section 6659.'" Gilman v.
Commissioner, supra at 151 (quoting Massengill v. Commissioner,
876 F.2d 616, 619-620 (8th Cir. 1989), affg. T.C. Memo. 1988-
427); see also Rybak v. Commissioner, 91 T.C. 524, 566-567
(1988); Zirker v. Commissioner, 87 T.C. 970, 978-979 (1986);
Donahue v. Commissioner, T.C. Memo. 1991-181, affd. without
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