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Rico in the instant cases was substantially different from the
past.
In MedChem, we concluded that the taxpayer-subsidiary’s
“business presence” in Puerto Rico was insignificant in
that it did not contribute significantly to Puerto
Rico’s economy either by creating new jobs or by
providing capital to others to build new plants. * * *
All of * * * [the taxpayer-subsidiary’s] business
activities after June 30, 1990, were based in Woburn,
* * * [Massachusetts,] and * * * [the taxpayers’]
primary connection to Puerto Rico during that time was
to further its efforts to move the manufacturing of
* * * [the drug] to Woburn * * *. Id. at 338-339.
In contrast, in the instant cases, the effect of EAPR’s
operations was to transfer to Puerto Rico the manufacturing
operations that had hitherto been performed almost halfway around
the world.
In MedChem, we found that the taxpayer-subsidiary “was
expressly prohibited by the processing agreement from taking a
managerial role in the manufacturing process.” Id. at 342. In
contrast, in the instant cases, PPI and EAPR agreed that (1) all
the lease employees “shall be under the general supervision of
EAPR”, and (2) “EAPR shall also supervise and control all
technical and product-related training required by” the lease
employees. The parties’ stipulations make it clear that the EAPR
manager position was filled “at all times during the years at
issue” by “a manager who * * * worked in the leased space covered
by the Lease” and who was compensated by EAPR. See supra table
2. Also, it is evident that Alvarado directly supervised PPI
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