What are the tax consequences for netco

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Reference no: EM13277091

NetCo, a US corporation, is planning to start operating in Argentina. NetCo has formed a 100% owned subsidiary in Argentina, ArgCo. NetCo contributes a number of assets to ArgCo in exchange for all of ArgCo's stock. ArgCo will use the assets in an active trade/business. The assets contributed include the following:
- Accounts receivable with a basis of $20,000 and a fair market value of $65,000,
- Equipment that was purchased for $250,000 and depreciated over the years such that the current adjusted basis is $190,000. The fair market value of the equipment is $260,000,
- Inventory that cost $50,000 has a value of $80,000, and
- Non-depreciable equipment that was purchased for $110,000 and has a fair market value of $165,000.

What are the tax consequences for NetCo when it contributes these assets to ArgCo in exchange for ArgCo stock? (transfer pricing rules)

Reference no: EM13277091

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