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and SAB Resource Recovery Associates (SAB Recovery). Petitioners
Richard E. Snyder and Ronald Busch were limited partners in both
SAB Reclamation and SAB Recovery. For convenience we refer to
these partnerships collectively as the Partnerships.
The transactions involving the Sentinel EPE recyclers leased
by the Partnerships are substantially identical to those in the
Clearwater Group limited partnership (Clearwater), the
partnership considered in Provizer v. Commissioner, supra.
Petitioners have stipulated substantially the same facts
concerning the underlying transactions as we found in the
Provizer case.
In the Provizer case, Packaging Industries, Inc. (PI)
manufactured and sold six Sentinel 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 the recyclers to FMEC Corp., which
sublicensed them back to PI. The sales of the recyclers from PI
to ECI Corp. were financed with nonrecourse notes. Approximately
7 percent of the sales price of the recyclers sold by ECI Corp.
to F & G Corp. was paid in cash with the remainder financed
through notes. These notes provided that 10 percent of the notes
were recourse but that the recourse portion of the notes was only
due after the nonrecourse portion, 90 percent, was paid in full.
All of the monthly payments required among the entities in
the above transactions offset each other. These transactions
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