[2] The meaning of “market price” under Article 60(1) of the former Inheritance Tax and Gift Tax Act, and where the transaction value cannot be deemed as a price formed by a normal transaction that properly reflects the objective exchange value of inherited property, whether the market price can be calculated according to the supplementary assessment method under Article 60(3) of the former Inheritance Tax and Gift Tax Act, considering that it is difficult to calculate the market price (affirmative)

[2] Article 60(1), (2), and (3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Inheritance Tax Act”) and Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22042, Feb. 18, 2010); “market price” refers to an amount that is generally established when a transaction is freely conducted between many and unspecified persons, i.e., an objective exchange price formed through a normal transaction. Thus, even if a transaction example exists, if it cannot be deemed as a price formed by a normal transaction that properly reflects the objective exchange value of inherited property, the market price is difficult to be calculated, and the value can be calculated according to a supplementary assessment method prescribed in Article 60(3) of the former Inheritance Tax and Gift Tax Act.

1. As to the grounds of appeal Nos. 1 and 2

A. Article 60(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Inheritance Tax Act”) declares the principle of market value by requiring the value of the property on which an inheritance tax is imposed to be calculated at the market price as of the commencement date of the inheritance. Article 60(2) of the same Act provides that “The market price under the provisions of paragraph (1) shall be the value deemed ordinarily established if a free transaction is made between many and unspecified persons, and shall include the value which is recognized as the market price under the conditions as prescribed by the Presidential Decree, such as the expropriation, public sale price, appraisal price, etc.” The main sentence of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 22042, Feb. 18, 2010) provides that one of the market price determined as the market price under the proviso to Article 60(1)1 of the same Act provides that “Where it is objectively difficult to calculate the market price with a person having a special relationship.”

Article 60(1) of the Inheritance and Gift Tax Act provides that the value of inherited property shall be assessed according to the market price, and the application of the value assessed by the method prescribed in Articles 61 through 65 of the Inheritance and Gift Tax Act pursuant to Article 60(3) of the Inheritance and Gift Tax Act is limited to the case where it is difficult to calculate the market price, and its requirements and the order are specified in the law, so it cannot be deemed that there may be arbitrary or arbitrary interpretation and application. Therefore, it cannot be deemed that the essential content of the property right and private property system of a taxpayer is infringed.

In addition, “market price” referred to in these provisions refers to a value generally established when a transaction is freely conducted between many and unspecified persons, i.e., an objective exchange price formed through a normal transaction. Thus, even if a transactional example exists, if it cannot be deemed a price formed by a normal transaction that properly reflects the objective exchange value of inherited property, the market price is difficult to be calculated, and the price can be calculated according to the supplementary assessment method stipulated in Article 60(3) of the former Inheritance and Gift Tax Act (see, e.g., Supreme Court Decision 2012Du7905, Feb. 12, 2015).

B. citing the reasoning of the judgment of the court of first instance, the court below acknowledged the facts as stated in its holding. Although the deceased non-party 1 (hereinafter "the deceased non-party 1"), who was the owner of each of the lands of this case, agreed on August 9, 2005 to sell the sale price of 10,684 square meters of each of the lands of this case and the land of this case, and 2,362 square meters of forests and fields ( Address 1 omitted) adjacent thereto, and 2,362 square meters of forests and fields, and 3.2 billion won with non-party 3, etc. on April 26, 2008, the average of the individual land prices of this case were 26,493 won per square meter at the time of commencement of inheritance, the court below determined that each of the above land prices of this case assessed the market prices of each of the above cases as 2.6 billion won higher than the above sale price of each of the land of this case, and determined that the plaintiffs were lawful in light of the objective land price of each of this case.

C. Examining the record in light of the aforementioned provisions and legal principles, the lower court did not exhaust all necessary deliberations as alleged in the grounds of appeal, and did not err by misapprehending the legal doctrine on property rights guarantee principles, private property system, and transaction example included in the market price under the Constitution, or by misapprehending the legal doctrine on transaction example.

2. As to the third ground for appeal

The lower court determined that the Defendant’s disposition of this case, which corrected the omission or error in the details of the Plaintiffs’ inheritance tax return, did not violate the principle of trust and good faith solely on the grounds that the Defendant intended to impose inheritance tax based on the value reported by the Plaintiffs on each land

Examining the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on the principle of good faith, contrary to what is alleged in the grounds of appeal.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Ki-taik (Presiding Justice)