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arrange for any scrap produced by the end-users to be further
reprocessed and sold. PI agreed to maintain and repair the
machines.
On December 1, 1982, in a series of transactions similar to
those of the Clearwater Group partnership in Provizer v.
Commissioner, supra, petitioner purchased two Sentinel EPS
recyclers for a total of $3,500,000.5 Petitioner then entered
into a joint venture agreement with RRI and PI for the
"exploitation" of his recyclers. Thus, the significant
transactions of petitioner's purchase of the Sentinel EPS
recyclers differ from the underlying transactions in Provizer in
the following respects: (1) The form of petitioner's interest in
the equipment; (2) the entity from which petitioner's interest
was obtained; (3) petitioner's participation in a joint venture
after purchasing the recyclers; and (4) the number of machines
sold, leased, licensed, and sublicensed.
Petitioner, as the sole owner of RRI, was responsible for
placing his Sentinel EPS recyclers with end-users. Because
petitioner was also responsible for placing other investors'
Sentinel EPS recyclers with end-users, he could not place his
recyclers in the most profitable locations; i.e., locations with
the most expanded polystyrene to recycle. Rather, the most
5 Petitioner purchased the Sentinel EPS recyclers for cash
in the amount of $135,000 and a note in the amount of $3,365,000.
It does not appear that petitioner made any payments on the note.
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