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tax and business energy credits totaling $39,604. The underlying
deficiencies in these cases result from respondent's disallowance
of petitioners' claimed operating losses and credits related to
Hyannis for taxable year 1981.
The underlying transaction in these cases was found by this
Court to be the initial Plastics Recycling transaction in
Provizer v. Commissioner, T.C. Memo. 1992-177, and may be
summarized as follows. In 1981, Packaging Industries, Inc. (PI),
manufactured and sold six Sentinel expanded polyethylene (EPE)
recyclers to ECI Corp. for $5,400,000 ($900,000 each), of which
$340,000 was paid in cash. ECI Corp., in turn, resold the
recyclers to the Hyannis limited partnership for $6,400,000
($1,066,666 each), of which $440,000 was paid in cash. Hyannis
then leased the recyclers to FMEC Corp., which subleased them
back to PI. All of the monthly payments for nonrecourse notes,
leases, and licenses, which were required among the entities in
the above transactions, offset each other. These transactions
were accomplished simultaneously.
After the Hyannis offering closed, the safe-harbor leasing
rules were enacted as part of the Economic Recovery Tax Act of
1981 (ERTA), Pub. L. 97-34, 95 Stat. 172. The underlying
transaction was restructured in a manner designed to take
advantage of the safe-harbor provisions. F & G Corp. became the
safe-harbor lessor and was interposed between ECI Corp. and the
primary leasing partnership, in this case Hyannis. Subsequent
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