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We think the circularity of payments, the deferral
provisions, and the similarity of ownership among the entities,
when taken together, are sufficient to satisfy respondent's
burden that petitioner, while nominally “personally liable” for
the assumed liabilities under section 465(b)(2), effectively was
immunized from any realistic possibility of suffering an economic
loss under section 465(b)(4), was not at risk, and is not
entitled to the deductions in question. Levien v. Commissioner,
supra at 120. We so hold.
Additions
Section 6621(c)
Respondent seeks increased interest pursuant to section
6621(c). That section provides for an increase in the interest
rate to 120 percent of the statutory rate on underpayments of tax
if a substantial understatement is due to a tax-motivated
transaction. Certain transactions are deemed to be “tax
motivated” by section 6621(c)(3), including any loss disallowed
under section 465(a). Sec. 6621(c)(3)(A)(ii).
Since we have concluded that the loss deductions in issue
are disallowed under section 465(a), it follows that the
activities were tax motivated under section 6621(c)(3). We
therefore sustain respondent on this issue.
Section 6653(a) (Negligence)
Respondent has determined an addition to tax under section
6653(a) for negligence. Section 6653(a)(1) (section
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