- 23 - Accordingly, the record supports respondent's assertion that a substantial understatement under section 6661 exists with respect to petitioner's 1982 taxable year. Respondent also determined that petitioner was liable for increased interest under section 6621(c) for each of the taxable years 1980, 1981, 1982, and 1983. The increased interest equals 120 percent of the interest payable under section 6601 with respect to any substantial underpayment attributable to a tax- motivated transaction. An underpayment is substantial if it exceeds $1,000. Sec. 6621(c)(2). A "tax motivated transaction" includes, among other categories, valuation overstatements within the meaning of section 6659 and any sham or fraudulent transaction. See sec. 6621(c)(3)(A)(i) and (v). Respondent has conceded that section 6659 is not applicable in this case. Accordingly, we consider whether the energy-device transaction was a "sham or fraudulent". Transactions that lack economic substance or a profit motive are sham transactions under section 6621(c). See, e.g., Cherin v. Commissioner, 89 T.C. 986, 1000 (1987); sec. 301.6621-2T Q&A- 4, Temporary Proced. & Admin. Regs., 49 Fed. Reg. 50392 (Dec. 28, 1984). Respondent argues that the facts here support a holding that petitioner's energy-device transaction was a tax motivated transaction within the meaning of section 6621(c). As with the prior issues, petitioner argues that he did not expect to make an immediate profit, but that he expected retirement income from thePage: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
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