- 38 -
have held that the Clearwater transactions to which petitioners'
1981 underpayment is attributable were a sham. A tax-motivated
transaction includes any sham or fraudulent transaction. See
sec. 6621(c)(3)(A)(v); Provizer v. Commissioner, supra. Finally,
the grounds for the disallowance of petitioners' claimed tax
benefits was largely the overvaluation of the Sentinel EPE
recyclers. Cf. McCrary v. Commissioner, 92 T.C. at 857-860.
Under these circumstances, the increased rate of interest is
therefore clearly applicable. Accordingly, we sustain respondent
on this issue.
Petitioners have made other arguments that we have
considered in reaching our decision. To the extent that we have
not discussed these arguments, we find them to be without merit.
To reflect our disposition of the disputed issues, as well
as petitioners' concession,
Decision will be entered
for respondent.
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