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petitioners imply that profit motive should be analyzed at the
individual partner level, not at the partnership level. We
recently held to the contrary in Vanderschraff v. Commissioner,
T.C. Memo. 1997-306. We incorporate herein our analysis and
conclusion in Vanderschraaf on this legal issue.
In light of our resolution of the above issues (namely, the
lack of profit objective of Cromwell and the nongenuine nature of
Cromwell’s debt obligations) on the bases explained, other
arguments made by respondent with regard to the disallowance of
Cromwell’s claimed losses and credits need not be addressed.
With regard to the additions to tax under sections
6653(a)(1) and (2) and 6661, we incorporate herein our analyses
and findings as set forth in our Krause v. Commissioner, supra,
and Vanderschraff v. Commissioner, supra, opinions. For the
reasons stated therein, we do not sustain respondent's imposition
of the additions to tax.
As we explained in Krause v. Commissioner, supra at 180,
imposition of increased interest under section 6621(c), and its
predecessor section 6621(d), is more automatic. Section 6621(c)
provided an increased rate of interest for substantial
underpayments attributable to tax-motivated transactions.
Substantial underpayments are defined as underpayments in excess
of $1,000. By regulation, among the types of transactions that
are considered to be tax-motivated transactions within the
meaning of section 6621(c) are those with respect to which the
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