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fraudulent transactions under section 6621(c)(3)(A)(v).
Respondent notes that transactions constituting either shams in
fact or shams in substance are shams for purposes of section
6621(c)(3)(A)(v). Cherin v. Commissioner, 89 T.C. 986, 1000-1001
(1987); see Thomas v. United States, 166 F.3d 825, 834 (6th Cir.
1999) (holding that once a transaction is found to be a sham,
section 6621(c) interest is imposed regardless of a taxpayer’s
investment motive); Anderson v. Commissioner, 62 F.3d 1266, 1274
(10th Cir. 1995) (same), affg. T.C. Memo. 1993-607.
B. Section 6621(c)
Section 6621(c)21 (formerly section 6621(d)) provides for an
increased rate of interest with respect to “any substantial
underpayment” of tax in any taxable year “attributable to 1 or
more tax motivated transactions” if the amount of the
underpayment for such year so attributable exceeds $1,000.
Section 6621(c)(3)(A) generally lists the types of transactions
which are considered “tax motivated transactions”. A tax
motivated transaction includes any valuation overstatement within
the meaning of section 6659(c), and such a valuation
overstatement exists, among other situations, if the adjusted
basis of property claimed on any return exceeds 150 percent of
21 The Omnibus Budget Reconciliation Act of 1989 (OBRA
1989), sec. 7721(b), 103 Stat. 2106, 2399, repealed sec. 6621(c).
This repeal was effective for returns the due date for which
(determined without extensions) is after Dec. 31, 1989. See OBRA
1989 sec. 7721(c), 103 Stat. 2400, Pub. L. 101-239.
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