- 5 -
significance, petitioners have stipulated substantially the same
facts concerning the underlying transactions that were described
in Provizer v. Commissioner, supra.
In a 4-step series of simultaneous transactions closely
resembling those described in Provizer and stipulated by the
parties herein, Packaging Industries of Hyannis, Massachusetts
(PI) manufactured and sold4 four Sentinel EPS5 recyclers to ECI
Corp. (ECI) for $1,520,000 each. ECI simultaneously resold the
recyclers to F&G Corp. (F&G) for $1,750,000 each. F&G
simultaneously leased the recyclers to Dickinson. Finally,
Dickinson simultaneously entered in a joint venture with PI and
Resin Recyclers, Inc. (RRI) to “exploit” the recyclers and place
them with end-users. Under this latter arrangement, PI was
required to pay Dickinson a monthly joint venture fee.
For convenience, we refer to the series of transactions
4 Terms such as sale and lease, as well as their
derivatives, are used for convenience only and do not imply that
the particular transaction was a sale or lease for Federal tax
purposes. Similarly, terms such as joint venture and agreement
are also used for convenience only and do not imply that the
particular arrangement was a joint venture or an agreement for
Federal tax purposes.
5 EPS stands for expanded polystyrene. Provizer v.
Commissioner, T.C. Memo. 1992-177, involved Sentinel expanded
polyethylene (EPE) recyclers. However, the EPS recycler
partnerships and the EPE recycler partnerships are essentially
identical. See Davenport Recycling Associates v. Commissioner,
T.C. Memo. 1998-347, affd. 220 F.3d 1255 (11th Cir. 2000); see
also Gottsegen v. Commissioner, T.C. Memo. 1997-314 (involving
both the EPE and EPS recyclers); Ulanoff v. Commissioner, T.C.
Memo. 1999-170 (same).
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