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the sheep breeding partnerships, the Court considered evidence
pertaining to all of the sheep partnerships. And all the sheep
breeding partnerships were operated in the same manner.
Section 6621(c) provides for an increased rate of interest
with respect to any substantial underpayment of tax in any
taxable year attributable to a tax-motivated transaction.
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
the correct amount of basis. Secs. 6621(c)(3)(A)(i), 6659(c). A
tax-motivated transaction further includes “any sham or
fraudulent transaction.” Sec. 6621(c)(3)(A)(v).
It is well established that the tax consequences of
transactions are governed by substance rather than form. Frank
Lyon Co. v. United States, 435 U.S. 561, 573 (1978). When
taxpayers resort to the expedient of drafting documents to
characterize transactions in a manner which is contrary to
objective economic realities and which has no significance beyond
expected tax benefits, the particular forms they employ are
disregarded for tax purposes. Id. at 572-573; Helvering v. F. &
R. Lazarus & Co., 308 U.S. 252, 255 (1939). If a transaction is
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