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Plastics Recycling programs were structured in a similar manner
to take advantage of the new statutory safe-harbor opportunities.
See Provizer v. Commissioner, T.C. Memo. 1992-177. 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 Corp. then
leased the recyclers to Clearwater, which licensed them to FMEC
Corp., which sublicensed them to PI. The transaction involved
herein differed from the Clearwater transaction in the following
respects: (1) F & G Corp. 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 Corp. and then licensed them to FMEC Corp.3 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, the Sentinel EPE recyclers
considered in these cases are the same type of machine considered
3
There is no explanation in the record as to why the six
recyclers were sold to F & G Corp. 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 was modified in an attempt to take advantage of
those rules by inserting F & G Corp. in the transaction.
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