2. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

Each imposition of gift tax of KRW 135,117,380 (including additional tax) on January 1, 2012 against Plaintiff AA on June 1, 2017 and each imposition of KRW 90,051,240 (including additional tax) on the gift tax of KRW 135,117,380 (including additional tax) granted to Plaintiff AA on January 1, 2012 shall be revoked.

A. BB Communications Co., Ltd. (hereinafter referred to as “B”) was established on July 10, 2008 as an unlisted corporation for the purpose of printing business.

B. On January 1, 2012, PPP acquired 3,500 shares of BB (hereinafter “instant shares”) from CCC, who is not a related party, as stipulated in Article 35(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11845, May 28, 2013; hereinafter “former Inheritance Tax and Gift Tax Act”); Article 26(4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 23591, Feb. 2, 2012; hereinafter the same) at a face value of KRW 5,00 per share (hereinafter “market transaction”).

C. After that, PP was killed on August 22, 2013 (hereinafter “the deceased”), Plaintiff AA and the deceased’s children, the deceased’s spouse, and Plaintiff AA and YY, and Z were inherited by inheritance shares.

D. After conducting a tax investigation on the details of changes in stocks BB from May 30, 2016 to April 28, 2017, the commissioner of the regional tax office: (a) determined that: (b) he/she received stocks at issue at “5,000 won per share” under Article 63(1)1 (c) of the former Inheritance Tax and Gift Tax Act; (c) and Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act; and (c) received stocks at issue at “5,000 won per share; (c) determined that the difference was donated from CCC without justifiable grounds under transaction practices pursuant to Article 35(2) of the same Act; and (d) notified the Defendant of gift tax at KRW 381,372 x 3,500 - 5,00 x 3,000 x 3,000 x 3,500 x 500 x 3,500) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

E. Accordingly, on June 1, 2017, the Defendant: (a) inherited the shares at issue from the deceased and succeeded to the liability to pay the said shares; (b) imposed the gift tax amount of KRW 135,117,380 on the Plaintiff AA calculated according to the shares of inheritance pursuant to Article 24(2) of the former Framework Act on National Taxes (amended by Act No. 12162, Jan. 1, 2014); (c) on the Plaintiff’s occupation, YY, and ZZ, the gift tax of KRW 90,051,240 (including additional tax) on the Plaintiff AA (hereinafter referred to as the “instant disposition”).

F. The Plaintiffs appealed and filed a petition for trial with the Tax Tribunal on July 27, 2017, but the Tax Tribunal dismissed the Plaintiffs’ petition on October 25, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 3, Eul evidence Nos. 1 and 2 (including branch numbers, if any), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiffs' assertion

1) The “5,000 won per share that the Deceased acquired at issue shares from CCC” constitutes the market price.

2) Even if the value of the shares at issue is remarkably lower than the market value, CCC transferred shares to the Deceased for the purpose of liquidation of the business relationship and recovery of the investment amount, and the transaction value was determined through mutual equal negotiations between the two parties, and CCC, other than a related party, has justifiable grounds for transaction practice in light of the circumstances where CCC, other than a related party, transfers the shares to the Deceased at a lower price than the market value.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Facts of recognition

A) On July 2008, the CCC, a partner of the Plaintiff AA and DD and DD, established a printed production chain BB by joint investment around July 2008. DD was appointed as a representative director, CCC director, and Plaintiff AB as an auditor. At the time of its establishment, DD, CCC, and 3,000 shares each were acquired, respectively. CCC paid a total of KRW 17,50,000 per share (=5,000 per share) calculated at a face value of KRW 5,00 per share (5,000 x 3,500 shares).

B) BB manufactured and supplied car-scoogs, etc. to the FF Automobile Co., Ltd. (hereinafter referred to as the “FF Automobile”), which is the main trading office. Since the end of 2010, the strike of FF Automobile came to have been fixed from FF cars, and BB increased sales from FF cars to KRW 400 to KRW 500 million since 2010, and thereafter the said sales continued to have been continuously maintained.

C) Since October 2011, BB received orders to replace FF cars’ nationwide business signboards, sales amounting to KRW 1 billion per month between 11, and December 201. Furthermore, from the year 2012 to the mid-2013, sales amounting to KRW 400 million per month was maintained.

D) Meanwhile, around 2011, BB requested GG accounting corporation to assess the per share value of the stocks at issue. On June 30, 201, GG accounting corporation assessed the value per share of the stocks at issue as '63,533 won per share according to the supplementary assessment method of unlisted stocks under Article 63(1)1(c) of the former Inheritance Tax and Gift Tax Act, based on June 30, 201 as the evaluation base date.

E) Around June 17, 2013, the Deceased performed investment activities, such as business activities, etc. to enable EE to extend the supply contract of BB and FF cars. After concluding an investment performance agreement with the Deceased to transfer the key stocks to EE as a consideration and compensation, the Deceased signed on July 5, 2013, and then transferred the key stocks to EE to KRW 17,50,000 (= KRW 5,000 per face value x 3,500 per face value x 3,500 per face value). Meanwhile, the shareholders status in B in 2012 and 2013 are as listed below [Attachment].

F) After the Deceased died on August 22, 2013, the Plaintiffs asserted the cancellation of the transfer contract concluded between the Deceased and EE on the ground of nonperformance of the obligation to pay the purchase price of shares, and filed a lawsuit against EE, Seoul Central District Court 201**********. The above court accepted the Plaintiffs’ assertion and rendered a judgment to confirm that the Plaintiffs are the shareholders of the shares at issue on January 20, 2017, and the said judgment became final and conclusive around that time.

G) Meanwhile, on July 5, 2017, the Plaintiffs reported inheritance tax of KRW 2,592,00,000 on the premise that the value of the shares at issue, which are inherited property, is KRW 740,613 per share.

[Ground of Recognition] Facts without dispute, entry of Gap evidence 2, testimony of KK for the witness, purport of the whole pleadings

2) Whether KRW 5,000 per share, the key transaction value, is the market value

A) Relevant statutes and legal principles

Article 60 (1) of the former Inheritance Tax and Gift Tax Act provides that "the value of the property on which the 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 commences, and Article 60 (3) provides that "if it is difficult to calculate the market price in the application of paragraph (1), the value assessed by the methods prescribed in Articles 61 through 65 in consideration of the type, size, transaction circumstances, etc. of the relevant property shall be deemed the market price," and Article 63 (1) 1 (c) of the former Inheritance Tax and Gift Tax Act provides that "in the case of unlisted stocks, the value of non-listed stocks shall be appraised by the methods prescribed by Presidential Decree in consideration of the assets, profits, etc. of the relevant corporation." Article 54 (1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "the net value per share (the value per share determined and announced by the Minister of Strategy and Finance in consideration of the increase of net profit and loss per share for the last three years elapsed company bonds guaranteed by the financial institution."

Meanwhile, in the case of unlisted stocks with low market value, the transaction value shall be deemed the market value and the stock value shall not be assessed based on the supplementary valuation method stipulated in the former Inheritance Tax and Gift Tax Act. However, since the market value means the objective exchange value formed through the general and normal transaction, in order to be recognized as the market value, the circumstances that can be seen as properly reflecting the objective exchange value at the date of donation should be acknowledged (see, e.g., Supreme Court Decision 2010Du26988, Apr. 26, 2012).

B) Specific determination

그러므로 보건대, 앞서의 인정사실과 변론 전체의 취지에 의하여 인정되는 다음과 같은 사정 즉, ① CCC이 2008년경 DDD, 원고 AAA과 공동으로 BB을 설립하면서 쟁점주식을 액면가인 1주당 5,000원에 인수한 이후 2010년경부터 BB이 주거래처인 FF자동차에 카탈로그 납품을 꾸준하게 하면서 월 4억 내지 5억 원 정도로 매출이 증가하여 같은 액수로 유지되었고, 2011. 10. 중순경부터는 BB이 FF자동차의 전국 영업소 간판 교체사업을 수주 받기도 하여 2011년 11, 12월 사이에 월 10억 원정도의 매출이 발생하였으며, 나아가 2012년도부터 2013년도 중반까지도 월 4억 내지 5억 원 상당의 매출이 꾸준히 유지되었는바, 위의 객관적 지표에 의하면, BB은 2010년경부터 매출이 서서히 증대되는 추세였고, 쟁점거래 직전인 2011년 11, 12월에는 간판 교체사업 수주로 인하여 월 10억 원 상당의 급격한 매출이 발생한 사정 등에 비추어 주식가격의 상승요인이 있음이 분명해 보이고, 이를 고려하면 쟁점거래 당시 쟁점주식의 객관적 교환가치는 CCC이 쟁점주식을 인수한 시점의 가액보다 뚜렷이 상승하였을 것으로 추인됨에도 불구하고, 기존의 가액과 동일하게 '1주당 5,000원'으로 책정된 쟁점거래가액은 주가변동요인 등이 전혀 반영되지 않은 것으로서 거래 당시의 객관적 교환가치가 적정하게 반영되었다고 보기 어려운 점, ② 쟁점거래가액이 당시 시장에서 통용될 수 있는 거래가액이라거나 객관적 교환가치를 적정하게 담보한 것으로 볼만한 별다른 정황이 없고, 나아가 거래가액의 책정 근거에 관한 자료도 전혀 확인할 수 없으며, 오히려 GG회계법인은 쟁점거래 이전인 2011. 6. 30.을 기준일로 하여 구상속세및증여세법상의 보충적 평가방법에 따른 쟁점주식의 가액을 '1주당 63,533원'으로 평가하였는바, 위 평가자료는 쟁점거래가액의 책정에 있어 일응의 기준으로 작용할 여지가 있음에도 불구하고, 쟁점거래가액은 위 평가액 보다 무려 약 12배 낮은 수준인 1주당5,000원에 책정된 점, ③ 망인은 쟁점거래 이후인 2013. 7. 5.경 EEE에게 쟁점주식을 쟁점거래가액과 동일한 1주당 5,000원에 양도하였는데, 위 거래가액은 EEE가 BB과 FF자동차의 카탈로그 납품계약이 연장될 수 있도록 영업활동(로비활동) 등을 하는 특별한 조건과 결부된 사정에 비추어 당시 쟁점주식의 객관적 교환가치는 1주당5,000원을 훨씬 상회하였을 것으로 보이는 반면, 그와 달리 아무런 조건조차 결부되지않았음에도 불구하고 동일하게 책정된 쟁점거래가액은 객관적 교환가치보다 낮게 책정된 것으로 볼 여지가 큰 점, ④ 앞서의 여러 사정에 비추어 객관적 교환가치를 적정히반영하지 못한 쟁점거래가액을 시가로 볼 수는 없고, 오히려 구 상속세및증여세법 제60조 제3항, 제63조 제1항 제1호 다목, 같은 법 시행령 제54조 제1항에 의하여 재무제표 등의객관적 자료에 근거하여 1주당 순손익가치와 순자산가치를 일정비율로 가중평가하여 산정한 가액을 시가로 보아야 할 것이며, 위의 평가방법에 따라 산정한 쟁점주식의 가액인 '1주당 381,372원'과 비교하여 무려 약 76배 낮은 수준으로 책정된 쟁점거래가액인 '1주당 5,000원'은 시가보다 현저히 낮은 가액임이 분명한 점, ⑤ 원고들은 2017. 7.5. 망인으로부터 상속받은 쟁점주식의 가액을 상속개시 당시(2013. 8. 22.)의 구 상속세및증여세법상의 보충적 평가에 따른 가액인 '1주당 740,613원'으로 전제하여 상속세 신고를 하였는바, 이는 쟁점거래가액인 1주당 5,000원보다 무려 약 148배 높은 가액이고, 구 상속세및증여세법상의 보충적 평가에 따른 가액을 시가로 볼 수 없다는 원고들의 주장과도 배치되는 점 등을 종합해 보면, 쟁점거래가액인 '1주당 5,000원'은 쟁점거래 당시의 시가라 할 수 없고, 구 상속세및증여세법상의 보충적 평가방법에 따른 평가액인 '1주당 381,372원'이 시가라 할 것이므로, 원고들의 이 부분 주장은 이유 없다.

3) Whether there is justifiable reason for transaction practices

A) Relevant legal principles

In order for the taxation of gift tax under Article 35(2) of the former Inheritance Tax and Gift Tax Act to be lawful, the tax authority must prove not only that the transferee acquired the property at a price significantly lower than the market price from a person other than the person having a special relationship, but also that there is no justifiable ground for transaction practice (see, e.g., Supreme Court Decision 2011Du22075, Dec. 22, 2011). However, if the tax authority is a reasonable economy, it can be proven that there is no justifiable ground for the transaction practice by submitting the objective circumstance, etc. that the taxpayer would not have made any transaction under such conditions as at the time of the transaction. If it is proved to a considerable extent, it is necessary to prove that there is a special circumstance that the taxpayer can easily submit specific data on the transaction circumstance, the reason for determining the transaction conditions, etc. in light of the difficulty of proof to reverse the said provision or the concept of fairness (see, e.g., Supreme Court Decision 2013Du2495, Feb. 12, 2015)

B) Specific determination

Therefore, in light of the following circumstances: (a) it is difficult for the Plaintiffs to accept CB transaction with CB as its shareholders and directors at the time of the 20th transaction; (b) it is difficult to accept CB transaction with BB due to the fact that CB transaction was conducted on July 4, 201; (c) CCC’s assertion that CB transaction was not conducted on the basis of the 1st transaction terms and conditions of the 20th transaction; and (d) CB’s assertion that CB transaction was conducted on the basis of the 1st transaction terms and conditions before the 20th transaction terms and conditions, and that CB transaction was not conducted on the basis of the 1st transaction terms and conditions, and that CB’s assertion that CB transaction was conducted on the basis of the 3rd transaction terms and conditions of the 1st transaction terms and conditions at the time of the 20th transaction, and that CCC’s assertion that CB transaction was conducted on the basis of the 1st transaction terms and conditions of the 1st transaction terms and conditions.

3. Conclusion

Therefore, the plaintiffs' claim of this case is without merit, and all of them are dismissed. It is so ordered.

shall be determined as above.