Bruce and Lois Zenkel, et al. - Page 7

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          Associates (SAB Reclamation), and SAB Resource Recycling                    
          Associates (SAB Recycling).  Petitioners Zenkel are limited                 
          partners in SAB Reclamation; petitioner Blount is a limited                 
          partner in Phoenix; petitioners David are limited partners in SAB           
          Recycling; and petitioners Selvin are limited partners in                   
          Scarborough.  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           






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