- 6 -
of the notes was only due after the nonrecourse portion, 90
percent, was paid in full. No arm's-length negotiations for the
price of the Sentinel EPE recyclers took place among PI, ECI, and
F&G. All of the monthly payments required among the entities in
the above transactions offset each other. These transactions
occurred simultaneously.
PI allegedly sublicensed the recyclers to entities that
would use the recyclers to recycle plastic scrap. These
agreements provided that the end-users would transfer to PI 100
percent of the recycled scrap in exchange for a payment from FMEC
based on the quality and amount of recycled scrap.
Both Clearwater and Plymouth leased Sentinel EPE recyclers
from F&G and licensed those recyclers to FMEC. For convenience,
we refer to the series of transactions among PI, ECI, F&G,
Plymouth, and FMEC, as the Plymouth transactions.
In addition to the Plymouth transactions, a number of other
limited partnerships entered into transactions similar to the
Plymouth transactions, some of which involved Sentinel EPE
recyclers and others of which involved Sentinel EPS recyclers.
One such partnership was Taylor, which leased four Sentinel EPS
recyclers. We refer to the transactions involving Taylor and the
EPS recyclers as the Taylor transactions.
The Taylor transactions were substantially similar to the
Plymouth transactions described above and the Clearwater
transactions described in Provizer v. Commissioner, supra.
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