Article 17 of the Enforcement Rule of the Inheritance Tax and Gift Tax Act

2. The defendant's disposition of imposition of gift tax of KRW 37,879,90 against the plaintiff on March 1, 2004 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The following facts may be acknowledged by adding up the whole purport of pleadings to Gap evidence 1, 2, 4, Eul evidence 1-1 through 4, and Eul evidence 2-1 through 3:

A. On March 31, 199, the Plaintiff, his mother and her major shareholder, ○○○○○ Co., Ltd. (hereinafter “○○○○○○”) donated 3,000 shares of ○○○○○, a non-listed share (hereinafter “instant shares”), and assessed the price per share of the instant shares as KRW 8,357, and reported and paid KRW 3,310,650 on March 31, 199.

B. However, on April 1, 1999, the Defendant deemed that ○○○○ donated KRW 1.1 billion to ○○○○○, the husband of ○○○○ and her husband, as of the donation date of the instant shares under Article 17(3)1 of the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 79 of May 7, 1999; hereinafter referred to as the “Enforcement Rule of the Act”), the right to receive the instant shares as of the donation date of this case, and assessed the price per share of the instant shares as KRW 42,968 in accordance with the Net Asset Value Act by adding it to the ○○○○’s assets, and assessed the value per share of KRW 128,904,00 as the taxable value of donated property calculated accordingly to the Plaintiff on March 1, 204, additionally imposing gift tax of KRW 37,879,90 (hereinafter referred to as the “instant disposition”).

2. Whether the instant disposition is lawful

A. Summary of the plaintiff and the defendant's assertion

(1) Plaintiff

(A) The donation date of the instant shares is March 31, 1999.

(B) On Apr. 1, 199, another Gohap○ deposited the instant issue amount into ○○○○. However, on Mar. 31, 1999, no contract was concluded with ○○○○ on the donation of the instant issue amount to ○○○○ by March 31, 199 (However, there was only a contract concluded between ○○○ and ○○○○○ on Apr. 1, 199 with the content that 2.3 billion won including the instant issue amount was donated to ○○○○ on Apr. 1, 1999). The instant issue amount does not fall under the value for which the right to receive as of Mar. 31, 199, the donation date of the instant shares, becomes final and conclusive.

(C) Therefore, the instant disposition, calculated by adding the instant issue amount to the assets of ○○○○○○○, based on the premise of objection, is unlawful.

(2) Defendant

(A) The donation date of the instant shares is April 1, 1999.

(B) The key amount of the instant issue deposited to ○○○○○ is part of KRW 2.3 billion, which had been donated by ○○○○○ prior to the date of donation of the instant shares, from the date of donation of the instant shares, to another ○○○○, a major shareholder, and the previous ○○○○. Therefore, the right to receive the instant shares as of the donation

(C) Therefore, the key issue amount should be included in assessing the value of the instant shares, and the subsequent disposition is lawful.

(b) Related statutes;

The entry in the attached Form shall be as follows.

(c) Fact of recognition;

The following facts are as follows: Gap evidence 2, Gap evidence 3-1 through 3, Eul evidence 4, Eul evidence 5-1 through 4, Gap evidence 7, 8, Gap evidence 9, 10-1, 2, Gap evidence 11-1 through 5, Gap evidence 12, 13-1 through 5, Gap evidence 14, 15, Gap evidence 16-1, 2, Eul evidence 17-21, Eul evidence 17-21, Eul evidence 1-3, 3, 4, Eul evidence 5-1 through 6, Eul evidence 7, Eul evidence 8-1 through 8-8, and there is no counter-proof evidence otherwise.

(1) Since around 1998, ○○○○○ had a low business performance and did not receive money due to the default of its customer. At early 1999, ○○○○ branch and ○○ branch and ○○ branch (hereinafter “○○ branch”) with a loan obligation of KRW 8 billion have deteriorated financial structure due to the deterioration of financial structure between ○○○ branch and ○○ branch and ○○ branch, which are the representative director of ○○○○○○○ branch, around March 199, in order to improve the financial structure.

(2) On March 12, 1999, the Seoul ○○○-dong ○○○○○○○ ○-dong ○○ 502.2 square meters and the five-story building on its ground (hereinafter “the instant real estate”) jointly owned the instant real estate, and offered the instant real estate loans to Nonparty ○○○○ ○○ ○○ ○○ ○○ ○○ ○. On March 12, 199, the agreement was concluded to sell the instant real estate to Nonparty ○ ○ ○ ○ ○ ○ ○ ○ ○ ○, and the said agreement was concluded to sell the instant real estate to Nonparty 1 ○ ○ ○ ○ ○ ○ ○ ○ ○ , and deposited the instant amount of KRW 400 million on March 13, 199, KRW 4300,000,000 on April 1, 199.

(3) On March 24, 1999, as the representative director and the major shareholder of ○○○○○○○○, the Namdo○○○○○○○ is a major shareholder, and he prepared a "○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ on March 29, 199.

(4) The contract to give the Plaintiff the instant shares by April 1, 1999 (No. 1-3, No. 1-2, No. 3, and No. 3) was written, and the date of preparation was written, and the contract to give the Plaintiff a donation of KRW 2.3 billion to ○○○○. The date of preparation was written on April 1, 1999, with the agreement to give the Plaintiff a donation of KRW 2.3 billion (No. 3).

(5) Meanwhile, since April 29, 1998, the former ○○○ was in office as a director of ○○○○○○○○, and as of April 1, 1999, held ○○○○○○○○○○○○’s shares as of April 1, 199, but he did not directly participate in the management of ○○○○○○○, but was engaged in art (materials) activities as an instructor at a university.

(6) When filing a tax return following the donation of the instant shares, ○ Accounting Firm reviewed the propriety of the calculation of the gift tax on March 31, 1999 as the donation date, and ○○○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ on April 1, 199 on the donation date, and written on March 31, 199 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ on the donation date.

(7) The "detailed statement on changes such as stocks, etc. submitted by ○○○ upon reporting corporate tax in 1999 to the Defendant" is written as " March 31, 1999".

D. Determination

(1) As to the donation date of the instant shares

As seen earlier, ① an accounting firm and a tax accountant in charge of tax return following the donation of the instant shares handled on March 31, 199 as well as on March 31, 199 the donation date of the instant shares. Also, even before ○○○○○○’s donation of the shares from Nam-do at the time, the donation date was dealt with as March 31, 199. Accordingly, the first date of the donation is March 31, 199, and ② ○○○○○ filed a corporate tax return for 1999 with the statement on changes, such as the “stocks, etc. submitted by ○○○○○○ at the time of filing the corporate tax return for 1999,” and ③ ○○○○○○○○○○’s establishment of the donation date as stated on March 31, 199, as alleged by the Plaintiff, should have been objectively reflected on the donation date of the instant shares as stated on March 31, 199.

(2) As to whether the issue amount in this case constitutes the determined value of the right to be paid as of the base date of appraisal under the Enforcement Rule of the Act

The following facts are revealed. ① The date on which ○○○○○○○○○ was actually deposited in ○○○○○○○ on April 1, 199, and the Plaintiff’s donation of the instant shares on or after March 31, 199; ② other than the donation contract (Evidence 3) between ○○○○ and ○○○○○○○○○○○○○○, which declared that the instant real estate was donated to ○○○○○○○○○, including the instant outstanding shares, and there is no objective evidence to deem that the ○○○○○○○○’s consent was given to ○○○○○○○○○○○○○○○○○○○○○’s donation of the instant real estate on or before the 19th anniversary of the date of the instant donation. In light of the fact that ○○○○○○○○○○’s real estate donation of the instant real estate was established, it cannot be deemed that the said ○○○○○○○ was an objective material for disposal of the instant real estate.

(3) Sub-decisions

Therefore, the disposition of this case conducted on a different premise cannot be calculated by adding the issue amount to the assets of ○○○○ upon the evaluation of the value of the stock of this case.

3. Conclusion

Therefore, the plaintiff's claim shall be accepted with due reason, and the judgment of the court of first instance is unfair with different conclusions, so the judgment of the court of first instance shall be revoked, and the defendant shall revoke the disposition of imposition of gift tax of KRW 37,879,90 against the plaintiff on March 1, 2004, and it shall be so decided as per Disposition.

Related Acts and subordinate statutes

(1) The former Inheritance Tax and Gift Tax Act (amended by Act No. 6048 of Dec. 28, 1999)

Article 60 (Principles for Evaluation, etc.)

(1) The value of property on which an inheritance tax or gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63 (2))

(3) In the application of paragraph (1), where it is difficult to calculate the market price, the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the type, size, transaction status, etc. of the relevant property.

Article 63 (Evaluation of Securities, etc.)

(1) The appraisal of securities, etc. shall be conducted by the following methods:

1. Appraisal of stocks and investment shares:

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the methods prescribed by Presidential Decree in consideration of corporation assets and profits;

(1) Enforcement Decree of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 16660 of December 31, 199)

Article 23 (Time of Acquisition of Donated Property)

(2) In the application of the provisions of paragraph (1), where the donated property is a stocks or equity shares (hereafter in this paragraph, referred to as the “stocks, etc.”), it shall be deemed that the donee has acquired such stocks, etc. on the date objectively confirmed that the payment of dividend, or the exercise of shareholder’s right, etc. has been delivered: Provided, That in case where the date on which the delivery of the relevant stocks, etc. is unclear or the address, name, etc. of the acquisitor is entered in the stockholders’ list or the employees’ list pursuant to the provisions of Article 337 or

Article 54 (Appraisal of Unlisted Stocks)

(1) Stocks and investment shares not listed on the Korea Stock Exchange (hereinafter referred to as “nonlisted stocks” in this Article) under Article 63 (1) 1 (c) of the Act shall, except in the case of paragraph (2), be the value assessed by the following formula:

Value per share = [The net asset value of the relevant corporation / the total number of issued stocks (hereinafter referred to as "net asset value + the weighted average amount of net profits and losses for the latest three years per share / The average interest rate formed in the financial market (hereinafter referred to as "net profit and loss value") prescribed by the Ordinance of the Ministry of Finance and Economy] ± 2

(2) Where any of the following applies to unlisted stocks, the appraised value according to net asset value shall be based on the value of unlisted stocks:

4. Stocks or investment shares the net profit or loss per share of which is less than 50/100 of the net asset value per share;

Article 55 (Calculation Method of Net Asset Value)

(1) The net asset value under Article 54 (1) shall be the value calculated by subtracting liabilities from the value appraised under Articles 60 through 66 of the Act as of the evaluation base date.

(2) In applying the provisions of paragraph (1), the amount related to the evaluation of assets and liabilities such as deferred assets, reserves, allowances, etc. as prescribed by the Ordinance of the Ministry of Finance and Economy shall be deducted or added from the value of assets and liabilities,

(1) Enforcement Rule of the former Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 79 of May 7, 199)

Article 17 (Appraisal, etc. of Unlisted Stocks)

(3) The methods of deducting or adding the assets or liabilities of the relevant corporation in the evaluation of assets and liabilities, such as deferred assets, reserves, allowances for appropriation, etc. under the provisions of Article 55 (2) of the Decree, shall be as classified in the following subparagraphs:

1. The value of a right to be paid as of the evaluation base date shall be calculated by adding it to the assets;

[Supreme Court Decision 2007Du9808 (No. 26, 2007)]

The costs of appeal are assessed against the defendant.