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advantage of the safe-harbor provisions. F & G corporation
became the safe-harbor lessor and was interposed between ECI and
the primary leasing partnership, in this case Hyannis.
Subsequent Plastics Recycling programs were structured in a
similar manner to take advantage of the new statutory safe-harbor
opportunities. See Provizer v. Commissioner, supra. We refer to
the transactions herein collectively as the Hyannis transaction.
In the Provizer case, we considered such a restructured
Plastics Recycling transaction, the Clearwater transaction. In
the Clearwater transaction, PI sold six EPE recyclers to ECI
Corp. for $981,000 each. ECI Corp., in turn, resold the
recyclers to F & G Corp. for $1,162,666 each. F & G then leased
the recyclers to Clearwater, which licensed them to FMEC, which
sublicensed them to PI. The transaction involved herein differed
from the Clearwater transaction in the following respects: (1)
F & G purchased the recyclers for $6,400,000, rather than the
$6,975,996 paid in Clearwater, and (2) Hyannis, rather than
Clearwater, leased the recyclers from F & G and then licensed
them to FMEC.4 In all other material respects the transactions
are substantively identical. Hyannis is thus like Clearwater,
occupying the same link in the transactional chain. In addition,
4
There is no explanation in the record as to why the six
recyclers were sold to F & G for $6,400,000 in the Hyannis
transaction but later the same number of identical machines sold
for $6,975,996 in subsequent Plastics Recycling transactions. We
note that the Hyannis partnership initially closed at the lower
price prior to the enactment of the safe-harbor legislation, and
subsequently the arrangement was modified in an attempt to take
advantage of those rules by inserting F & G in the transaction.
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