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FINDINGS OF FACT
Some of the facts have been stipulated in each case and are
so found. The stipulated facts and attached exhibits are
incorporated in the respective cases by this reference.
A. The Plastics Recycling Transactions
These cases concern petitioners' investments in two limited
partnerships that leased Sentinel expanded polyethylene (EPE)
recyclers: Plymouth Leasing Associates (Plymouth) and SAB
Resource Reclamation Associates (SAB Reclamation). Petitioners
Grelsamer are limited partners in SAB Reclamation and petitioner
Morgan is a limited partner in Plymouth. 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
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