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In a notice of deficiency dated June 21, 1985, respondent
determined a deficiency in petitioners' 1981 joint Federal income
tax in the amount of $53,202.25. In an answer to the petition,
respondent asserted that petitioners are liable for increased
interest on the deficiency accruing after December 31, 1984,
calculated at 120 percent of the statutory rate under section
6621(c).1 In an amendment to answer, respondent asserted
additions to tax for that year pursuant to section 6659 at the
30-percent rate for valuation overstatement, in the amount of
$2,660 under section 6653(a)(1) for negligence, and under section
6653(a)(2) in the amount of 50 percent of the interest due on the
underpayment attributable to negligence.
The parties filed a Stipulation of Settled Issues concerning
the adjustments relating to petitioners' participation in the
Plastics Recycling Program. The stipulation provides:
1. Petitioners are not entitled to any deductions,
losses, investment credits, business energy investment
credits or any other tax benefits claimed on their 1981
tax return as a result of petitioner's participation in
Resource Reclamation Associates.
1 The answer refers to sec. 6621(d). This section was
redesignated as sec. 6621(c) by sec. 1511(c)(1)(A) of the Tax
Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, 2744, and
repealed by sec. 7721(b) of the Omnibus Budget Reconciliation Act
of 1989 (OBRA 89), Pub. L. 101-239, 103 Stat. 2106, 2399,
effective for tax returns due after Dec. 31, 1989, OBRA 89 sec.
7721(d), 103 Stat. 2400. The repeal does not affect the instant
case. For simplicity, we will refer to this section as sec.
6621(c). The annual rate of interest under sec. 6621(c) for
interest accruing after Dec. 31, 1984, equals 120 percent of the
interest payable under sec. 6601 with respect to any substantial
underpayment attributable to tax-motivated transactions.
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