Article 10 of the Inheritance Tax and Gift Tax Act: Method of Verifying Obligations

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

A. On April 12, 2005, the Plaintiff entered into a donation agreement with her husband Kim ○○, Seoul, ○○○○-dong 000,000 and 000.0 cubic meters (hereinafter “the instant site”) owned by Kim ○○-dong, Seoul, and the land of this case on April 15, 200, on the cement brick, bricks, slives, slives, slives, and the apartment floor of the second floor, the first floor, the second floor, the second floor, the second floor, the second floor, the 00.00 cubic meters building (hereinafter “the instant building”). The Plaintiff completed the registration of ownership transfer for each of the instant real estate on April 15, 2005.

B. On April 27, 2005, when the Plaintiff reported the gift tax base to the Defendant, the Plaintiff assessed each of the instant real estate as KRW 611,607,820 (the instant real estate + KRW 588,004,000 + the instant building KRW 23,603,820). 31,607,820, which deducts the secured obligation of each of the instant real estate as the secured obligation, as the payable obligation, shall be calculated as the taxable value of donated property; and 11,607,820, which deducts the amount of KRW 300,000 from the amount of gift tax calculated on the basis of KRW 1,160,782; and then, it voluntarily paid KRW 1,704,70, which deducts the reported tax amount of KRW 116,780 from the assessed tax amount of gift tax.

C. On March 3, 2006, the Defendant assessed the value of each real estate of this case as KRW 637,826,50 ( KRW 588,00,000 + KRW 49,822,500 of the instant building + the instant property 49,822,500), rather than KRW 61,60,820, not KRW 637,826,50, not considering the amount of debt, and imposed KRW 337,826,50,010, not considering the amount of debt, on the ground that the Plaintiff cannot be deemed to have acquired the instant obligation from Kim○, on the gift tax base (hereinafter the instant disposition of imposition).

(A) Evidence Nos. 1-12, Nos. 1-3 and the purport of the whole pleadings)

2. The legality of disposition.

A. The plaintiff's assertion

The Plaintiff’s acquisition of KRW 31,60,820 against ○○ Bank Co.,, Ltd. (hereinafter “○○ Bank”) in accordance with the instant donation agreement. As such, it is apparent that 311,607,820, which deducts the above amount of debt from the value of donated property of each of the instant real estate, should be assessed as gift tax based on the taxable value of donated property. The Defendant’s disposition otherwise opposed to this view is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) On April 12, 2005, the Plaintiff entered into a gift agreement with her husband Kim ○○ and each of the instant real estate, and completed the registration of ownership transfer for each of the instant real estate on April 15, 2005.

(2) On April 1, 2005, Kim○-○ loaned a loan of KRW 300 million from the ○○ bank, and the maximum debt amount for the instant real estate was KRW 360 million with respect to the instant real estate.

(3) The gift contract of this case states that "a witness succeeds to and takes over the obligation to repay Kim○, the donor, Kim○, ○○."

(4) On January 5, 2006, the Plaintiff received a prior notice of taxation on the gift tax of this case from the Defendant, and on January 16, 2006, changed the debtor of the above right to collateral security from Kim○ to the Plaintiff.

(5) The Plaintiff did not have any particular income at the time of the donation contract of this case. The certificate of income tax withholding and each salary payment statement (Evidence A20) stated that the Plaintiff received KRW 1.8 million per month from her husband Kim ○○, who operated the hotel on April 2005 to April 6, 2005.

(6) On May 12, 2005, a copy of the passbook in the name of Kim○-○○ bank, stating that the amount of interest was collected and paid in KRW 1.5 million per month on the instant obligation.

(No. 1-23 Evidence, No. 1-3 Evidence, and the purport of the whole pleadings)

D. Determination

Whether a donee took over a donor’s obligation should be determined according to the substance of the donation of property without relation to whether the donee had changed the name of the donor’s obligation, and whether the donee actually bears the relevant obligation. In full view of the following various circumstances, the Plaintiff cannot be deemed to have taken over the instant obligation from the Defendant.

(1) Until the time the Plaintiff received the notice of pre-announcement of taxation from the Defendant, the title holder of each of the instant real estate was registered in the certified copy of the registry of the instant real estate as Kim○-○.

(2) The fact that interest was paid on the instant obligation in the deposit account of Kim○-○ continuously from the donation date to December 2005.

(3) The fact that the Plaintiff appears to have no special income source to cover interest on the instant debt.

(4) Although the Plaintiff received a certain amount of benefits from the ○○ hotel, ○○ hotel is an enterprise operated by the Plaintiff’s husband, and it cannot be recognized that the Plaintiff actually performed the work and received the benefits, and even if not, the time of payment is later than April 2005.

(5) The obligation of this case was owed by ○○ Bank immediately before Kim○○ donated each of the instant real estate to the Plaintiff, and the specific use of the loan was also unclear.

3. Conclusion

Therefore, the defendant's disposition of this case is legitimate, and the plaintiff's assertion is without merit, and the plaintiff's claim is dismissed as per Disposition.

public official law, order of law,

Inheritance Tax and Gift Tax Act

Article 47 (Taxable Amount of Gift Tax)

(1) The taxable amount of gift taxes shall be the total amount of the donated property under the provisions of this Act as of the date of donation [excluding the value of the donated property under the provisions of Articles 40 (1) 2, 41-3, 41-5, and 42 (4) (hereinafter referred to as the “ donated property”)] minus the amount taken over by the donee, which is the debts secured by the donated property concerned (including debts prescribed by the Presidential Decree, such as debts, etc. related to the donated

(2) Omission

(3) In the application of the provisions of paragraph (1), with respect to an onerous donation between spouse, or between lineal ascendants and descendants (including the cases presumed to be a donation under Article 44), even if the donee takes over the obligation of the donor, the donee shall be presumed not to have taken over the obligation of the donee: Provided, That this shall not apply in case where the amount of the obligation concerned is objectively recognized under the conditions as prescribed by

Enforcement Decree of Inheritance Tax and Gift Tax Act

Article 36 (Liability Deducted from Taxable Amount of Gift Tax)

(1) Omission

(2) The term “where it is objectively recognized under the conditions as prescribed by the Presidential Decree” in the proviso of Article 47 (3) of the Act means the case proved under the provisions of each subparagraph of Article 10 (1).

Article 10 (Method, etc. of Verifying Obligations)

(1) For the purpose of Article 14 (4) of the Act, the term “those proved by the method as prescribed by the Presidential Decree” means the debts of the inheritee at the time of the commencement of inheritance, which are proved by one of the following subparagraphs:

1. Documents confirming that debts owed to the State, local governments and financial institutions are debts owed to such institutions;

2. Debt obligations owed to any person other than those under subparagraph 1, shall be verified by a contract for debt-bearing, a creditor's certificate, documents evidencing the establishment of security and the payment of interest, etc.

(2) Financial institutions referred to in paragraphs (1) 1 and Article 15 (2) of the Act mean financial institutions referred to in subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy.