G. D. Searle & Co. v. Comm'r of Revenue
Citation | 88 T.C. No. 16,88 T.C. 252 |
Decision Date | 04 February 1987 |
Docket Number | Dkt. No. 12836-79 |
Parties | G. D. SEARLE & CO. AND SUBSIDIARIES, Petitioners v. COMMISSIONER OF REVENUE, Respondent |
Court | United States Tax Court |
OPINION TEXT STARTS HERE
TABLE OF CONTENTS
+-----------------------------------------------------------------------------+ ¦ ¦ ¦¦Page¦ +------------------------------------------------------------------------+----¦ ¦Headnote ¦255 ¦ +------------------------------------------------------------------------+----¦ ¦Introduction and Statement of Issues ¦256 ¦ +------------------------------------------------------------------------+----¦ ¦Findings of Fact ¦257 ¦ +------------------------------------------------------------------------+----¦ ¦I. ¦History and Background of G.D. Searle & Co. ¦257 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Petitioner ¦¦257 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. SCO ¦¦259 ¦ +-------+----------------------------------------------------------------+----¦ ¦II. ¦History and Background of SCO's Products ¦259 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Aldactone and Aldactazide ¦¦259 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Banthine and Pro-Banthine ¦¦261 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦C. Flagyl ¦¦262 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦D. Lomotil ¦¦264 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦E. Ovulen and Demulen ¦¦265 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦F. Serenace ¦¦267 ¦ +-------+----------------------------------------------------------------+----¦ ¦III. ¦Pharmaceutical Business of Petitioner and Its Subsidiaries ¦268 ¦ +-------+----------------------------------------------------------------+----¦ ¦IV. ¦Historical Development of the Puerto Rican Operations of ¦269 ¦ ¦ ¦Petitioner and SCO ¦ ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Tax Incentives for Puerto Rican Operations ¦¦269 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Planning and Formation of SCO ¦¦270 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦C. SCO's Puerto Rican Tax Exemption Grants ¦¦273 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦D. Initiation of Pharmaceutical Manufacturing by SCO ¦¦274 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦E. Transfers of Intangible Property to SCO ¦¦276 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦F. Marketing Agreement ¦¦277 ¦ +-------+----------------------------------------------------------------+----¦ ¦V. ¦SCO's Manufacturing Activities ¦278 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Acquisition of Chemical Manufacturing Facility at Caguas ¦¦278 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Construction of Pharmaceutical Manufacturing Facilities at ¦¦279 ¦ ¦ ¦Caguas ¦¦ ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦C. Management and Personnel ¦¦280 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦D. Manufacturing and Related Activities ¦¦280 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦1. Products Manufactured and Sold ¦¦280 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦2. Production Planning and Scheduling ¦¦283 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦3. Inventory Control and Purchasing ¦¦284 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦4. Chemical Sourcing ¦¦286 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦5. Chemical Manufacturing ¦¦290 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦6. Pharmaceutical Manufacturing and Packaging ¦¦291 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦7. Production Tickets ¦¦293 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦8. Quality Control ¦¦295 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦9. Product Recalls ¦¦296 ¦ +-------+----------------------------------------------------------------+----¦ ¦VI. ¦Sale and Distribution of SCO's Productions ¦298 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Identity of SCO's Customers ¦¦298 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Orders of SCO's Products ¦¦299 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦C. Billing Procedures ¦¦300 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦D. Other Distribution Procedures ¦¦301 ¦ +-------+----------------------------------------------------------------+----¦ ¦VII. ¦Petitioner's Marketing Operations ¦301 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Introduction ¦¦301 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Marketing of SCO's Products ¦¦302 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦1. Sales Representation ¦¦302 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦2. marketing and Sales Administration ¦¦305 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦3. SCO's marketing Fee Payments to Petitioner ¦¦305 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦4. SCO's Other Marketing Expenses ¦¦306 ¦ +-------+----------------------------------------------------------------+----¦ ¦VIII. ¦Research and Development Activities ¦307 ¦ +-------+----------------------------------------------------------------+----¦ ¦ ¦A. Introduction ¦¦307 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦B. Research and Development Facilities ¦¦309 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦1. Petitioner's Facilities ¦¦309 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦2. SCO's Facilities ¦¦311 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦C. Regulatory Requirements ¦¦312 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦D. Petitioner's Regulatory Affairs Services Related to SCO's ¦¦313 ¦ ¦ ¦Products ¦¦ ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦E. Other Research and Development Activities Related to SCO's ¦¦318 ¦ ¦ ¦Products ¦¦ ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦1. Petitioner's Activities ¦¦318 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦2. SCO's Activities ¦¦319 ¦ +-------+---------------------------------------------------------------++----¦ ¦ ¦F. Research and Development of New Pharmaceutical Products ¦¦319 ¦...
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