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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 the
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