River City Ranches #1 Ltd., Jeffry Bergamyer, Tax Matters Partner - Page 27

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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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