Transfer of ownership from foreign subsidiary

Hello all. I have two related questions:

We have 100% ownership in a foreign subsidiary based in Latin America. There is one piece of equipment valued at 50K that we are going to transfer from the Latin America Subsidiary to the parent company in the USA. Now, since we own 100% of the subsidiary, technically that piece of equipment belongs to the US company, now how do we do the transfer of ownership? We do not want to 'pay' for it, and we do not want to pay taxes on its purchase. Would a simple 'transfer of ownership statement' be enough? or if it is necessary for us to 'purchase it' can we do so for given that we own the company who has possession of the equipment? Within the books of the US company, the net worth of the balance sheet would not change since the value of the gear will simply change from 'investment in Latin subsidiary' to 'equipment'.

When shipping the equipment through fedex to the US, we do not want to pay import taxes since this is not an import. The gear was manufactured and purchased here in the US and now is being sent back. In addition, we are not technically 'purchasing' this piece (or at least we do not want to) since we own it. Can this be done?

Can someone give us some feedback. Thanks.

On Mon, 03 Oct 2005 15:08:42 GMT, in alt.accounting "explorart" wrote in :

No, the subsidiary belongs to the US company. The equipment belongs to the sub.

I don't know how this will be treated because I don't have enough information, but if the item is subject to tarriffs if imported into the United States, you'll have to pay tarriffs. If there are tax consequences for the transfer of assets, either for the sub or the parent corp, you may have to pay taxes for one or the other country.

You are required to follow the tax laws of both countries for such sales. Many tax lawyers do quite well for themselves keeping their clients compliant. The general rule is that these sales have to be at market. Please check with your tax advisor for the proper handling of this particular transaction.

GAAP doesn't really treat it that way.

Do you have proper documentation to show that it was previously exported and that any taxes due at that time were paid?

I highly recommend that you talk with a professional who can give you specific tax advise in this area. Without such advice, it becomes easy to allow a perfectly legal attempt to properly avoid taxes turn into criminal tax evasion.

Don't make business decisions based on tax allergies only.