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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 43,681,890 for the Plaintiff on July 1, 2014 shall be revoked.

A. On September 15, 1988, the Plaintiff acquired and owned 1/2 shares of forest 929,500 square meters (hereinafter “instant land”) in OO-gun O-gun O-gun O-gun, O-ri, O-ri, O-ri, O-ri 92, O-ri, O-ri, 500 square meters, and transferred the instant land to the OOOO on April 18, 2013.

B. The instant land obtained authorization on a forest management plan based on the Forest Resources Creation and Management Act from 2001 to 2010.

C. The Plaintiff filed an application for special long-term holding deduction upon filing a return on the tax base of capital gains tax. On July 1, 2014, the Defendant, on the ground that the instant land was excluded from special long-term holding deduction as non-business land, issued a notice of correction and notification of KRW O,OO, andOO (hereinafter “instant disposition”). [Grounds for recognition] Nos. 7, 9, and Nos. 1, 3, 4, 7, and 8, and the purport of the entire pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) The instant land is a forest in operation with the approval of a forest management plan or is actually a forest in operation.

Considering the circumstances of use, etc., it is deemed that the land of this case is directly related to the business.

2) Even if the instant land is non-business land, as regards forest trees planted on the instant land, they should be taxed as business income on the land separate from the instant land.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Whether the instant land constitutes land for business

A) To exclude the instant land from the non-business land, it should fall under Article 104-3 (1) 2 (a) through (c) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; hereinafter the same). ① As seen earlier, the period from 2001 to 2010, for which the forest management plan was approved, is required for public interest under Article 104-3 (1) 2 (a) of the former Income Tax Act, or for the protection and development of forests, was excluded from the land for non-business. ② The Plaintiff did not have resided in the location of the instant land, and there is no room to fall under the forest owned by the person residing in the place of forest as prescribed by Article 104-3 (1) 2 (b) of the former Income Tax Act (amended by Act No. 12169, Jan. 1, 2014; ③ The period from 2001 to 2010>

B) We examine the instant case, Gap evidence Nos. 1 to 5, Eul evidence Nos. 2, 5 and 9, and this Court

6. From January 1, 2001 to December 31, 2010, the Plaintiff obtained authorization of the forest management plan only for 10 years since the expiration of the above period, and there is no further authorization after the expiration of the above period. According to the above, it appears to be all for non-business purposes if the land is calculated according to the standard for determining the period under Article 168-6 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26067, Feb. 3, 2015; hereinafter the same shall apply). (2) The Plaintiff appears not to have been required to have conducted business registration related to forest planting or felling for the purpose of the whole pleading, but to have been conducted for 60 years after the expiration of the above period. (3) The Plaintiff appears not to have been required to have conducted business registration related to forest planting or to have been conducted for 60 years after the completion of the pertinent forest management plan.

2) Whether the planted trees are subject to taxation of business income

A) Articles 19(1)1 and 94(1)1 of the former Income Tax Act provide that income generated from the transfer of land or buildings shall be capital gains, and income generated from forestry shall be business income. Article 51(8) of the former Enforcement Decree of the Income Tax Act provides that where the forest trees are not the business of cutting down or transferring the forest trees, but the forest trees are merely transferred along with the forest land, it shall not be deemed business income.

B) The following circumstances acknowledged by the evidence and the purport of the entire pleadings are as follows: (i) there is no evidence to deem that the Plaintiff actually engaged in the business, such as making business registration related to the planting of forest trees or cutting down and selling the forest trees during the retention period of the instant land; (ii) rather, it appears that the Plaintiff would engage in real estate brokerage business, selling of tegrical products or craft products, and manufacturing business of spherical products; and (iii) the Plaintiff did not regard only the forest trees planted on the instant land separately from the instant land at the time of selling the instant land to the OOO Federation, as separate objects of sale; and (iii) the Plaintiff voluntarily reported the transfer value including the forest trees on the instant land at the time of filing the transfer income tax base report; and therefore, it is reasonable to deem that the Plaintiff transferred the forest trees together with the instant land. Accordingly, it cannot be deemed that the business income from planting trees is subject to taxation.

3) Therefore, the Defendant’s instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.