- 33 -
defined in section 6621(c)(3). The increased rate of interest is
effective only with respect to interest accruing after December
31, 1984, notwithstanding that the transaction was entered into
before that date. See Solowiejczyk v. Commissioner, 85 T.C. 552
(1985), affd. per curiam without published opinion 795 F.2d 1005
(2d Cir. 1986); Provizer v. Commissioner, supra.
As we held in Provizer, a tax-motivated transaction
includes any sham or fraudulent transaction. See sec.
6621(c)(3)(A)(v). We have held that the Plastics Recycling
Program to which petitioners’ 1981 underpayment is attributable
was a sham transaction. The tax-motivated increased rate of
interest is therefore clearly applicable. Accordingly, we
sustain respondent’s determination on this issue.5
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,
Decision will be entered
for respondent.
5 We note that a tax-motivated transaction also includes
any valuation overstatement within the meaning of sec. 6659(c).
See sec. 6621(c)(3)(A)(i). It is apparent that there was such a
valuation overstatement in the present case. See the discussion
supra, under Issue (3), regarding sec. 6659. Accordingly,
respondent's determination could also be sustained on this
alternative basis.
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