- 592 -
constituted a substantial understatement of tax for which there
was no substantial authority or adequate disclosure within the
meaning of section 6661. The amounts of the additions to tax
under section 6661 can be determined in Rule 155 computations.
Issue 36. Whether Kanter Is Liable for Section 6621(c) Increased
Interest for 1978, 1979, 1980 Through 1984, and 1986, and 1987,
and 1988
OPINION
For the year at issue, section 6621(c), increased the
interest rate due on a deficiency to 120 percent of the statutory
rate (established under section 6601) on any underpayment of tax
that exceeds $1,000 attributable to "tax motivated transactions",
as defined in section 6621(c)(3). A tax-motivated transaction
includes, but is not limited to, a valuation overstatement (150
percent or more) under section 6659(c), any loss disallowed under
section 465(a), any credit disallowed under section 46(c)(8), any
sham transaction, and/or any fraudulent transaction. See sec.
6621(c)(3). Under section 6621(c)(3), tax-motivated transactions
also include transactions entered into without the requisite
profit motive and which lack economic substance. See Patin v.
Commissioner, 88 T.C. 1086 (1987), affd. without published
opinion 865 F.2d 1264 (5th Cir. 1989), affd. without published
opinion sub nom. Hatheway v. Commissioner, 856 F.2d 186 (4th Cir.
1988), affd. sub nom. Skeen v. Commissioner, 864 F.2d 93 (9th
Cir. 1989), affd. sub nom. Gomberg v. Commissioner, 868 F.2d 865
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