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substantially identical to those in the Clearwater Group limited
partnership (Clearwater), the partnership considered in Provizer
v. Commissioner, T.C. Memo. 1992-177. In addition, 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 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 would only be
due after the nonrecourse portion, 90 percent, had been paid in
full.
All of the monthly payments required among the entities in
the above transactions offset each other. These transactions
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
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