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Petitioners Gollin are limited partners in SAB Reclamation;
petitioners Fishbach are limited partners in SAB Recovery and SAB
Recycling;2 and petitioners Fredericks are limited partners in
SAB Recycling. 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, T.C. Memo.
1992-177. 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
2 The Fishbachs' interest in SAB Recovery and SAB Recycling
was acquired through the law firm in which Myron Fishbach was a
named partner during 1981 and 1982, Zimmer, Fishbach & Hertan.
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