- 37 -
Corp., supra. Rather, the difference in relevant facts in those
two cases led to the difference in result.
In the instant cases, EAPR (1) bought, from unrelated
sellers, and owned all the equipment used in Puerto Rico to
manufacture the video games; (2) bought, from unrelated
suppliers, and owned all the raw materials and components used in
Puerto Rico to manufacture the video games; and (3) was lessee of
the facilities in Puerto Rico in which the equipment and the raw
materials and components were used in Puerto Rico in
manufacturing the video games. EAPR’s manager lived in Puerto
Rico and worked in the leased space; he supervised PPI employees
in charge of managing materials and inventory control and saw to
it that assembly line mistakes were corrected. The role that
EAPR played regarding video game manufacturing in Puerto Rico was
much more like what the taxpayer did in Frank v. International
Canadian Corp., supra, than what the taxpayer did in United
States Gypsum Co. v. United States, supra.
In MedChem (P.R.), Inc. v. Commissioner, 116 T.C. at 337-
343, we discussed the factual elements that, in the aggregate,
led us to conclude that the taxpayer-subsidiary therein was not
in the active conduct of a trade or business in Puerto Rico
during the statutorily relevant 3-year time period.10 Although
10See MedChem (P.R.), Inc. v. Commissioner, 116 T.C. 308,
340 (2001), where we noted that “Some of the activities listed by
[the taxpayers] preceded the 3-year period, and very few of the
(continued...)
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