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6621(c) or any due process problem in the imposition of increased
interest under section 6621(c).
As part of their due process argument, petitioners note that
the accrued interest has, over the years, accumulated against
them to an amount far in excess of the income tax deficiencies.
Respondent counters that the bulk of the accrued interest
consists not of increased interest under section 6621(c) but of
regular interest under section 6621(a).
Petitioners’ reliance on Law v. Commissioner, 84 T.C. 985
(1985), and In re Hardee, 137 F.3d 337 (5th Cir. 1998), is
misplaced. Law v. Commissioner, supra, involved an untimely
attempt by respondent to raise increased interest in an amended
answer. In re Hardee, supra, was a bankruptcy opinion in which
it was held that section 6621(c) increased interest does not
constitute a penalty for purposes of the Bankruptcy Code.
Apart from section 183 and the determination of profit
objective thereunder, petitioners contend that for purposes of
increased interest under section 6621(c) the language of section
6621 imposes its own, separate profit objective test at the
partner-investor level. We disagree. As the Court of Appeals
for the Tenth Circuit stated in Hildebrand v. Commissioner, supra
at 1028, “Section 6621(c)(1) imposes an increased rate of
interest on ‘any substantial underpayment attributable to tax
motivated transactions,’ which include activities not engaged in
for profit.”
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