Ernest I. Korchak - Page 4

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          petitioner with respect to a partnership known as Madison                   
          Recycling Associates (Madison).7  For a detailed discussion of              
          the transactions involved in the Plastics Recycling cases, see              
          Provizer v. Commissioner, T.C. Memo. 1992-177, affd. per curiam             
          without published opinion 996 F.2d 1216 (6th Cir. 1993).  The               
          parties have stipulated that the underlying transactions in this            
          case are substantially similar to the transactions in Barlow v.             
          Commissioner, T.C. Memo. 2000-339 (where we found that the                  
          underlying transactions at issue were substantially identical to            
          the transactions in Provizer), affd. 301 F.3d 714 (6th Cir.                 
          2002), and Provizer v. Commissioner, supra.                                 
               In a series of simultaneous transactions, Plastics                     
          Industries Group, Inc. (PI), sold8 four Sentinel EPS Recyclers9             

               7Madison was formed on Oct. 1, 1982, by Richard Roberts (Mr.           
          Roberts), as general partner, and Denise Sausa, as limited                  
          partner, and sold 18 limited partnerships at $50,000 per unit.              
               8Terms 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 agreement            
          for Federal tax purposes.                                                   
               9Sentinel EPS Recyclers were used in a process designed to             
          transform scrap polystyrene into resin pellets that could be sold           
          on the open market.                                                         
               Although the transactions in Provizer v. Commissioner, T.C.            
          Memo. 1992-177, affd. per curiam without published opinion 996              
          F.2d 1216 (6th Cir. 1993), involved Sentinel EPE (expanded                  
          polyethylene) Recyclers, the recycling partnerships that leased             
          both the Sentinel EPS and Sentinel EPE Recyclers are                        
                                                             (continued...)           




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