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(6th Cir. 1989). Under section 6621(c)(3), tax-motivated
transactions also include losses disallowed by reason of invalid
debt. See HGA Cinema Trust v. Commissioner, T.C. Memo. 1989-370.
In notices of deficiency for 1981, 1983, 1984, 1986, and
1987, respondent determined that the Kanters' entire underpayment
was a substantial underpayment attributable to tax-motivated
transactions within the meaning of section 6621(c). Respondent's
determination is presumed correct, and Kanter had the burden of
proving that the determinations were erroneous.
In the answer to docket No. 1350-87 involving 1982,
respondent affirmatively alleged that the entire underpayment was
a substantial underpayment attributable to tax-motivated
transactions under section 6621(c). In amendments to answers for
1978 through 1984, and 1986 and 1988, respondent affirmatively
alleged that the increased underpayments resulting from Kanter's
failure to report "kickback" income were attributable to tax-
motivated transactions within the meaning of section 6621(c). To
the extent that the applicability of the increased interest rate
of section 6621(c) has been raised by answer or amendments to
answers, respondent bears the burden of proof. See Rule 142(a).
This Court has held that an underpayment attributable to the
taxpayer's failure to report income that was assigned to a
fraudulent or sham trust is an underpayment attributable to tax-
motivated transactions. See Kerr v. Commissioner, T.C. Memo.
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