Oreland A. and Lucille S. Thornsjo - Page 6




                                        - 6 -                                         
          Internal Revenue Code and Treasury regulations, F&G elected to              
          treat Hamilton as having purchased the recyclers for purposes of            
          the investment and business energy tax credits.                             
               Simultaneously, Hamilton entered into a joint venture with             
          PI and Resin Recyclers Inc. (RRI) for the “exploitation” of the             
          recyclers.  The joint venture agreement provided that RRI was to            
          assist Hamilton with the placement of recyclers with end-users.             
          At the same time, PI, ECI, F&G, Hamilton, and RRI entered into              
          arrangements providing that PI would pay a monthly joint venture            
          fee to Hamilton, in the same amount that Hamilton would pay as              
          monthly rent to F&G, in the same amount as F&G would pay monthly            
          on its note to ECI, in the same amount that ECI would pay each              
          month on its note to PI.  In connection with these arrangements,            
          PI, ECI, F&G, Hamilton, and RRI entered into offset agreements              
          providing that these monthly payments would only be kept as                 
          bookkeeping entries, and no money actually was transferred.                 
          Consequently, all of the monthly payments required among the                
          entities in the above transactions offset each other, and the               
          transactions occurred simultaneously.                                       
               The parties have stipulated that as of September 30, 1983,             
          only one Sentinel EPS recycler was placed in service by Hamilton.           
          However, on its 1982 tax return, also stipulated in evidence,               
          Hamilton reported that the four recyclers had a combined basis of           
          $7 million for purposes of the investment and business energy tax           






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