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published opinion 996 F.2d 1216 (6th Cir. 1993). For a detailed
discussion of the transactions involved in the Plastics Recycling
cases, see Provizer v. Commissioner, supra.
The facts concerning the transactions in Provizer can be
summarized as follows. Packaging Industries Group, Inc. (PI),
manufactured and sold six Sentinel Recyclers (the recyclers) to
Ethynol Cogeneration, Inc. (ECI), for $981,000 each. The sale of
the recyclers from PI to ECI was financed with nonrecourse notes.
In turn, ECI resold the recyclers to F&G Equipment Corp. (F&G)
for $1,162,666 each. The sale of the recyclers by ECI to F&G was
also financed with notes. These notes provided that 10 percent
of the note amount would be recourse but that the recourse
portion would only be due after the nonrecourse portion had been
paid in full. Subsequently, F&G leased the recyclers to the
Clearwater Group partnership, which then licensed the recyclers
to First Massachusetts Equipment Corp. (FMEC), which sublicensed
them back to PI. PI allegedly sublicensed the recyclers to
entities (the end-users), which would use them to recycle plastic
scrap. The sublicense provided that the end-users would transfer
100 percent of the recycled scrap to PI in exchange for payment
from FMEC based on the quality and amount of recycled scrap. All
the foregoing transactions were executed simultaneously.
In Provizer v. Commissioner, supra, we resolved the Plastics
Recycling matter as follows: (1) We found that each recycler had
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