What are the tax consequences of the transfer

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Problem - DP, a New Jersey corporation, manufactures equipment in the United States and sells it in the U.S. and several foreign countries. It has a branch in Brazil through which it makes sales to customers in Brazil and other countries in South America and installs and services the equipment purchased by these customers. Although the branch incurred losses in its early years, these losses have been more than made up by subsequent profits. DP incorporates the branch by transferring its assets (including accounts receivable, inventory, depreciable property of various sorts, and a building in which the branch activities are carried on) to a newly organized corporation, SC, in exchange for all of SC's stock.

If SC is incorporated in Brazil what are the tax consequences of the transfer? And when and how will the U.S. tax SC's profits?

Reference no: EM131629798

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