Joseph and Susan L. Ferraro - Page 4




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          A.  The Recycling Transactions                                              
               This case is part of the Plastics Recycling group of cases.            
          In particular, the deficiency, additions to tax, and additional             
          interest arise from the disallowance of a partnership loss                  
          deduction and investment and energy tax credits claimed by                  
          petitioners with respect to petitioner husband's (petitioner)               
          investment in a partnership known as the Clearwater Group                   
          (Clearwater).  Clearwater was one of a large number of plastics             
          recycling partnerships.  On its 1981 partnership return,                    
          Clearwater listed licensing as its principal business and                   
          recycling equipment as its principal product.                               
               For a detailed discussion of the transactions involved in              
          the Plastics Recycling group of cases, and specifically                     
          Clearwater, see Provizer v. Commissioner, T.C. Memo. 1992-177,              
          affd. per curiam without published opinion 996 F.2d 1216 (6th               
          Cir. 1993).  The transactions in this case are identical to the             
          transactions discussed in Provizer as they involve the same                 
          partnership and the same Sentinel EPE recyclers that were                   
          involved in Provizer.  Further, with the exception of certain               
          facts that we regard as having minimal significance, petitioners            
          have stipulated substantially the same facts concerning the                 
          underlying transactions that were described in Provizer.                    
          However, petitioners were not parties to Provizer and do not                
          agree to be bound by the decision therein.                                  





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