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$6,867,000 ($981,000 each), of which $533,000 was paid in cash.
ECI Corp., in turn, resold the recyclers to F & G Corp. for
$8,138,667 ($1,162,666 each), of which $618,000 was paid in cash.
F & G Corp. then leased the recyclers to Empire, which licensed
the recyclers to FMEC Corp., which sublicensed them back to PI.
All of the monthly payments required among the entities in the
above transactions offset each other. These transactions were
accomplished simultaneously. We refer to these transactions
collectively as the Empire transaction.
In Provizer v. Commissioner, supra, we examined the
Clearwater transaction. In the Clearwater transaction, PI sold
six EPE recyclers to ECI Corp. for $981,000 each, and ECI, in
turn, resold the recyclers to F & G Corp. for $1,162,666 each. F
& G leased the recyclers to a limited partnership, Clearwater,
which licensed them to FMEC, which sublicensed them to PI. The
transaction involved herein differs in two respects: (1) Seven
Sentinel EPE recyclers were sold and leased rather than six; and
(2) Empire, rather than Clearwater, leased the recyclers from F &
G and then licensed them to FMEC. Empire is therefore like
Clearwater, occupying the same link in the transactional chain.
The Sentinel EPE recyclers considered in these cases are the same
type of machines considered in the Provizer case. The fair
market value of a Sentinel EPE recycler in 1981 was not in excess
of $50,000.
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