2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition of KRW 34,523,740 (including additional tax) on the Plaintiff on July 1, 2016 shall be revoked.

A. On August 16, 2007, AJ Co., Ltd., a listed corporation (hereinafter referred to as “instant company”), conducted capital increase with a third party’s allocation (hereinafter referred to as “capital increase with a consideration”) on August 16, 2007. The Plaintiff participated in the instant capital increase and acquired 243,600 shares of the instant company (hereinafter referred to as “instant shares”) at KRW 821 per share.

B. The defendant acquired the shares of this case at a low price from the shareholders of the company of this case.

On July 1, 2016, the Plaintiff determined and notified the Plaintiff of KRW 5,956,750 (including additional tax), KRW 5,579,320 (CC donation amount), KRW 22,987,670 (hereinafter “instant disposition”).

C. Accordingly, the Plaintiff filed a tax appeal with the Tax Tribunal on September 12, 2016, but on November 28, 2016.

was dismissed. This decision was rejected.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3 (including branch numbers; hereinafter the same shall apply), Eul evidence Nos. 1 through 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The number of persons recommended to actually subscribe at the time of issuing new shares is 50 or more, and the securities are issued.

It constitutes a public offering of securities under Article 2 (3) of the Trade Act, and thus does not meet the taxation requirements under Article 39 (1) 1 (c) of the Inheritance Tax and Gift Tax Act.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) The former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter the same shall apply)

Article 39(1)1 of the Inheritance Tax and Gift Tax Act ("the Inheritance Tax and Gift Tax Act") that a corporation under item (c) has lower the market price of new shares.

Where a person who is not a stockholder of the relevant corporation issues new stocks from the corporation;

on the one hand, the profits acquired by being directly allocated shall be subject to gift tax; and

(hereinafter referred to as "the case where a stock-listed corporation or Association-registered corporation under the Securities and Exchange Act allocates securities as a method of public offering in accordance with Article 2 (3) of the same Act" is excluded from taxable objects.

Meanwhile, the old Securities and Exchange Act (amended by Act No. 8863 of Feb. 29, 2008, hereinafter referred to as "securities")

Article 2(3) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter referred to as the "Enforcement Decree of the Securities and Exchange Act") provides that "in conducting public offering of new securities pursuant to Article 2-4(1) of the former Enforcement Decree of the Securities and Exchange Act (amended by Presidential Decree No. 20551, Jan. 18, 2008; hereinafter referred to as the "Enforcement Decree of the Securities and Exchange Act"), the number of persons who are solicited to acquire new securities shall be not less than 50 persons." Article 2(3) of the former Enforcement Decree of the Securities and Exchange Act provides that "The method of calculating the number of persons who are recommended to subscribe shall be more than 50 persons." Article 2(5) provides that "in order to enable the person who is solicited to acquire securities, it refers to the activities of notifying the fact that securities are to be issued or sold through newspapers, broadcasting, and magazines, etc."

In light of the above provisions of the Securities and Exchange Act and the Enforcement Decree of the Securities and Exchange Act

In order to constitute an "public offering of new securities", the first issuer of securities shall first be subject to the Securities and Exchange Act.

section 2bisI shall require the soliciting person to acquire securities newly issued pursuant to section 2ter(5).

To do so, advertising through newspapers, broadcasting, magazines, etc., the distribution of printed materials, such as notices, publicity leaflets, and investment explanation.

Issuance or issuance of securities by holding a meeting, electronic communications or other similar means; or

It is required to inform that the sale is made or inform the acquisition procedure, and further, it is required to do so.

at least 50 persons who are recommended by such persons in the same manner as such;

(1) The same securities as the securities in question within the last six months from the date of solicitation for subscription in the same manner;

the Securities and Exchange Act (i.e., the Enforcement Decree of the Securities and Exchange Act) shall not be subject to public offering or sale.

The sum up to "a person who has been solicited to make an offer without the method prescribed in paragraph (5) of Article 2-4."

Since the number of securities must be at least 50 persons (see Supreme Court Decision 2003Do7554, Feb. 13, 2004). If an issuer of securities fails to engage in activities under Article 2-4(5) of the Enforcement Decree of the Securities and Exchange Act, even if the number of persons who are solicited to subscribe without going through public offering or sale is at least 50 persons, it does not constitute "public offering of securities" under Article 2(3) of the Securities and Exchange Act.

2) Pursuant to the above legal principles, each description and pleading of Evidence Nos. 2 through 4, and evidence Nos. 2 and 3

According to the purport of the whole, the instant company did not engage in the solicitation activities for subscription under Article 2-4 (5) of the Enforcement Decree of the Securities and Exchange Act, and did not look at the participants in the subscription through its major shareholders and their affiliates. Thus, regardless of whether there are 50 or more persons who have been solicited to subscribe, the instant capital increase with consideration cannot be deemed to have been made in accordance with the method of 'securities offering' under Article 2 (3) of the Securities and Exchange Act, and does not fall under the instant general provision that provides for cases excluded from the gift tax subject to gift tax. Accordingly, the Plaintiff’s assertion on different premise is without merit.

3. Conclusion

The plaintiff's claim is dismissed for lack of reason, and the costs of lawsuit shall be borne by the plaintiff who has lost.

It is so decided as per sentence.