Kenneth and Dorothy Hitchen - Page 3

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          increased rate of interest charged on “substantial underpayment             
          attributable to tax motivated transactions” under section                   
          6621(c).3  The issues for decision in these cases are:  (1)                 
          Whether petitioners are entitled to farming expense deductions              
          and to general business credits that they claimed with respect to           
          an investment in a sheep breeding partnership promoted by Walter            
          J. Hoyt, III (Mr. Hoyt); (2) whether petitioners are liable for             
          the additions to tax for (a) valuation overstatements and a gross           
          valuation misstatement, (b) negligence or disregard of rules or             
          regulations, and (c) substantial understatements of income tax;             
          (3) whether petitioners are liable for the increased rate of                
          interest charged on substantial underpayments attributable to tax           
          motivated transactions; and (4) whether respondent is equitably             
          estopped from imposing additions to tax and interest on the                 
          deficiencies in these cases.                                                
                                  FINDINGS OF FACT                                    
               Some of the facts have been stipulated and are so found.               
          The stipulation of facts and the attached exhibits are                      

          3References to sec. 6621(c) are to sec. 6621(c) as in effect                
          with respect to interest accruing after Dec. 31, 1986.  See Tax             
          Reform Act of 1986, Pub. L. 99-514, sec. 1511(d), 100 Stat. 2746.           
          For interest accruing before that date, but after Dec. 31, 1984,            
          a nearly identical provision was codified at sec. 6621(d).  See             
          id. sec. 1511(c)(1)(A), 100 Stat. 2744; Deficit Reduction Act of            
          1984, Pub. L. 98-369, sec. 144(a), (c), 98 Stat. 682, 684.  Sec.            
          6621(c) was repealed in 1989 with respect to returns due after              
          Dec. 31, 1989.  Omnibus Budget Reconciliation Act of 1989(OBRA              
          1989), Pub. L. 101-239, sec. 7721(b), (d), 103 Stat. 2399, 2400.            

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