- 42 - employees as to certain parts of the manufacturing process. He was not a foreman for PPI’s assembly line employees, nor did he hire and fire them. However: (1) He made sure that mistakes were corrected; (2) he “[watched] out for EA’s interests” as to the assembly work; and (3) “If things were going wrong [as to the assembly line], then PPI would call me in for assistance.” In MedChem (P.R.), Inc. v. Commissioner, 116 T.C. at 338 n.14, we stated as follows: 14 We distinguish Frank v. International Canadian Corp., 308 F.2d 520 (9th Cir. 1962), a case cited by petitioners to support their assertion that MedChem P.R. actively conducted a trade or business by virtue of its sales activity. The relevant holding in Frank concerned whether the taxpayer actively conducted a trade or business and did not concern where that trade or business was located. In the instant cases, EAPR’s activities in Puerto Rico with respect to the video games are critically different from the taxpayer’s activities in MedChem (P.R.), Inc. v. Commissioner, supra (where the taxpayer’s only activities in Puerto Rico were the taking of steps to move the business from Puerto Rico to Massachusetts), and Kewanee Oil Co. v. Commissioner, supra (where substantially all the taxpayer’s relevant income was derived from the sale of substantially all the taxpayer’s relevant business). Our findings (supra I.F.) lead us to conclude that EAPR, through its manager, participated regularly, continually, extensively, and actively in the management and operation of the manufacturing of video games in Puerto Rico.Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Next
Last modified: May 25, 2011