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Appeals for the Second Circuit, the Court to which appeal in
these cases lie. See 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 Todd
v. Commissioner, supra, and Heasley 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 Court of Appeals for the
Second Circuit 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 Court of Appeals
for the Second Circuit agreed with this Court and with the Court
of Appeals for the Eighth Circuit 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.
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