- 5 -
In a series of simultaneous transactions discussed in more
detail in the Provizer case, Packaging Industries of Hyannis,
Massachusetts (PI) manufactured and sold4 six Sentinel EPE
recyclers to ECI Corporation (ECI Corp.) for $981,000 each. PI
manufactures thermoplastic and other types of packaging
machinery, as well as energy saving devices. PI held itself out
as one of the world's largest manufacturers of blister packaging
machinery and fabricated a wide line of thermoforming machinery,
including highly specialized disposable medical and food
packaging systems. The Sentinel EPE recyclers were designed by
PI to process low-density polyethylene foam scrap. The recycling
process for polyethylene foam scrap consists of four steps and
results in the formation of a milky-white uniform pellet of
resin, but only if appropriate plastic scrap is collected and fed
into the recyclers.
ECI Corp. in turn resold the Sentinel EPE recyclers to F&G
Corporation (F&G Corp.) for $1,162,667 each. F&G Corp. then
leased them to Clearwater, which licensed them to FMEC
Corporation (FMEC Corp.), which sublicensed them back to PI.
4 Terms such as "sale", "lease", and "license", as well as
their derivatives, are used solely for convenience, and their use
in this opinion should not be understood to imply that the
transactions described herein constitute leases, sales, or
licenses for Federal tax purposes.
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Last modified: May 25, 2011