MedChem, Inc. v. Comm'r
United States Tax Court
P-USA is a corporation that is headquartered and has its manufacturing facility in the United States. Its wholly owned subsidiary is P-PR, which lists as its headquarters, officers, and directors the headquarters, officers, and directors of P- USA. A is a corporation unrelated to Ps that manufactures in Puerto Rico a drug named Avitene.
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P-USA is a corporation that is headquartered and has its manufacturing facility in the United States. Its wholly owned subsidiary is P-PR, which lists as its headquarters, officers, and directors the headquarters, officers, and directors of P- USA. A is a corporation unrelated to Ps that manufactures in Puerto Rico a drug named Avitene. On Dec. 18, 1987, A and certain related entities sold to Ps the equipment, technology, and other assets (except A's manufacturing facility in Puerto Rico) connected to Avitene's manufacturing. As part of the sale, A agreed to continue manufacturing Avitene…
1Opinion of the Court
OPINION
Laro, Judge:
These consolidated cases were submitted to the Court without trial. See Rule 122. Respondent determined an $815,196 deficiency in the Federal income tax of MedChem (P.R.), Inc. (MedChem P.R.), for its taxable year ended August 31, 1992. Respondent determined a $1,705,019 deficiency in the Federal income tax of MedChem Products, Inc., & Subsidiaries (MedChem Group) for its taxable year ended August 31, 1992. Following concessions, we must decide whether MedChem P.R. meets the “active conduct of a trade or business within a possession” requirement of section 936(a)(2)(B). We…
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