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stipulated substantially the same facts concerning the underlying
transactions as we found in the Provizer case.
In transactions closely resembling those in the Provizer
case, Packaging Industries, Inc. (PI), manufactured and sold
seven 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
Northeast, 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
7.5 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 only
due after the nonrecourse portion, 90 percent, was 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 was not in excess of $50,000.
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 a payment from FMEC
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