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were done simultaneously. Although the recyclers were sold and
leased for the above amounts under the structure of simultaneous
transactions, the fair market value of a Sentinel EPE recycler in
1981 and 1982 was not in excess of $50,000.
PI allegedly sublicensed the recyclers to entities that
would use them to recycle plastic scrap. The sublicense
agreements provided that the end-users would transfer to PI 100
percent of the recycled scrap in exchange for a payment from FMEC
Corp. based on the quality and amount of recycled scrap.
Like Clearwater, each of the Partnerships was formed to
lease Sentinel EPE recyclers from F & G Corp. and license those
recyclers to FMEC Corp.4 The transactions of the Partnerships
differ from the underlying transaction in the Provizer case in
the following respects: (1) The entity that leased the machines
from F & G Corp. and licensed them to FMEC Corp.; and (2) the
number of recyclers the Partnerships were organized to lease and
license.5 For convenience we refer to the series of transactions
4 In the stipulation of facts for petitioners Busch, the
parties stipulated that in 1982 SAB Recovery was also a partner
in the partnerships known as Scarborough Leasing Associates
(Scarborough) and Plymouth Equipment Associates (Plymouth).
Scarborough and Plymouth purported to lease Sentinel EPE
recyclers in transactions substantially identical to those in the
Clearwater Group limited partnership.
5 According to the offering memoranda, SAB Reclamation was to
lease and license eight recyclers and SAB Recovery was to lease
and license seven recyclers. However, the SAB Reclamation
partnership tax return for 1982 indicates that it leased and
licensed only four recyclers. The SAB Recovery partnership tax
(continued...)
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