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Like Clearwater, each of the Partnerships herein was formed
to lease Sentinel EPE recyclers from F & G Corp. and license
those recyclers to FMEC Corp.3 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.; (2) in the Northeast transaction, seven, rather than six,
machines were sold, leased, licensed, and sublicensed; and (3) in
the Hyannis transaction, F & G purchased the recyclers for
$1,066,667 each.4 For convenience we refer to the series of
transactions among PI, ECI Corp., F & G Corp., each of the
Partnerships, FMEC Corp., and PI as the Partnership transactions.
In addition to the Partnership transactions, a number of other
limited partnerships entered into transactions similar to the
Partnership transactions, also involving Sentinel EPE recyclers
3 As the Hyannis transaction was initially structured, Hyannis
purchased the recyclers from ECI Corp. and leased them to FMEC.
This transaction was restructured to take advantage of the safe-
harbor leasing rules of the Economic Recovery Tax Act of 1981
(ERTA), Pub. L. 97-34, 95 Stat. 172. As in all subsequent
Plastics Recycling programs, F & G Corp. was interposed between
ECI and the primary leasing partnership (in this case Hyannis).
4 There is no explanation in the record as to why the six
recyclers were sold to F & G Corp. for $6,400,000 in the Hyannis
transaction but later sold for $6,975,996 in subsequent Plastics
Recycling transactions. We note that the Hyannis partnership
initially closed at the lower price prior to the enactment of the
safe-harbor legislation, and subsequently the arrangement was
modified in an attempt to take advantage of those rules by
inserting F & G Corp. into the transaction.
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