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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 was due only after the
nonrecourse portion was paid in full. The fair market value of a
Sentinel EPE Recycler in 1981 was not in excess of $50,000, and
the nuts and bolts, or manufacturing cost, was $18,000. Other
recycling machines were commercially available during the years
in issue including the Buss-Condux Plastcompactor, Nelmor/Weiss
Densification System (Regenolux), Cumberland Granulators, and
Foremost Densilator. Information regarding these other machines
was readily available. PI allegedly sublicensed the recyclers to
entities that would use them to recycle plastic scrap. The
sublicense agreements provided that the end-users would transfer
to PI 100 percent of the recycled scrap in exchange for payment
from FMEC Corp. based on the quality and amount of recycled
scrap.
Like Clearwater, Sunbelt leased Sentinel EPE Recyclers from
F&G Corp. and, as prearranged, licensed those recyclers to FMEC
Corp. The significant transactions of Sunbelt differ from the
underlying transactions in Provizer v. Commissioner, supra, only
in the following respects: (1) The entity that leased the
machines from F&G Corp. and licensed them to FMEC Corp; and (2)
the number of machines sold, leased, licensed, and sublicensed.
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