- 5 - Hyannis, Massachusetts, manufactured and sold3 four Sentinel EPS4 Recyclers to Ethynol Cogeneration, Inc. (ECI) for $1,520,000 each. The sale of the recyclers from PI to ECI was partially financed with nonrecourse promissory notes. For each recycler, ECI agreed to pay PI $112,750 in cash and a 12-year nonrecourse promissory note of $1,407,250. Simultaneously, ECI resold the recyclers to F & G Equipment Corp. (F&G) for $1,750,000 per machine. For each machine, F&G agreed to pay ECI $128,250 in cash, with the balance financed through a partial recourse promissory note of $1,621,750. The note was recourse to the extent of 20 percent of its face value. However, the recourse portion was payable only after the nonrecourse portion was satisfied. In turn, F&G leased the recyclers to Hamilton. Pursuant to the lease and in accordance with applicable provisions of the 3 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. 4 EPS stands for expanded polystyrene. The case of Provizer v. Commissioner, T.C. Memo. 1992-177, affd. per curiam without published opinion 996 F.2d 1216 (6th Cir. 1993), 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, supra; see also Ulanoff v. Commissioner, T.C. Memo. 1999-170 (same); Gottsegen v. Commissioner, T.C. Memo. 1997-314 (involving both the EPE and EPS recyclers).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011