Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal

The costs of appeal are assessed against the plaintiffs.

1. Article 31(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11609, Jan. 1, 2013; hereinafter "the Inheritance Tax and Gift Tax Act") provides that the donated property subject to gift tax includes all articles having economic value which can be converted into money and all de facto or de facto rights having property value, which are the property belonging to the donee. Article 60(1) provides that the principle of market value is declared by requiring the value of the property on which gift tax is levied to be in accordance with the market price as of the date of donation. Article 60(2) provides that "Where it is difficult to calculate the market price when the market price is freely traded between many and unspecified persons, the value assessed by the methods prescribed in Articles 61 through 65 shall be considered as the market price in consideration of the type, scale, transaction circumstances, etc. of the relevant property."

Therefore, property belonging to the donee and having property value that can be converted into money is included in the donated property, and the calculation of the value is based on the market price as of the date of donation. However, if the pertinent donated property is not freely traded among many and unspecified persons, and there is no other provision in assessing its value immediately and it is impossible to calculate its market price immediately, it shall be imposed on the basis of the amount that corresponds to the property value

2. The lower court determined to the following purport by citing and modifying the reasoning of the judgment of the first instance.

A. On September 25, 2012, ChapterCC concluded four immediate pension insurance contracts with the content of temporary payment of insurance premium as ○○○○○ on October 25, 2012, and paid the total insurance premium as ○○○○ on the same day.

On October 17, 2012, CC donated two of the instant pension insurance to the Plaintiffs, their children, and accordingly changed the contractor, pension beneficiary, and maturity beneficiary of the pertinent insurance to the Plaintiffs on October 19, 2012.

B. By changing the Plaintiffs to the contractor of the instant pension insurance, the Plaintiffs succeeded to and acquired various rights and obligations under the instant pension insurance contract, including the Plaintiffs’ claim for termination refund upon termination of the contract and the right to receive payment under the insurance contract. Such status of the policyholder constitutes donated property under Article 31(1)2 of the Inheritance Tax and Gift Tax Act.

C. According to the terms and conditions of the instant pension insurance, the market price of the right to refund insurance premiums at the time of donation is the amount for termination and refund as of the date of donation. On the other hand, the amount assessed by the Plaintiffs by deeming the right to receive a lump sum payment under Article 65 of the Inheritance Tax and Gift Tax Act and Article 62 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 26960, Feb. 5, 2016; hereinafter referred to as “Enforcement Decree of the Inheritance Tax and Gift Tax Act”) as the right

In addition, where gift tax is imposed by evaluating the value of the instant pension insurance as the right to receive a premium under Article 62 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act or as prescribed by Ordinance of the Ministry of Strategy and Finance, both the right to receive premium refund and the right to receive abstract insurance claims are determined as specific rights. While the market value of the amount to be paid under the terms and conditions at the time of termination is determined as the amount to be paid at the time of termination, the market value of the right to receive premium refund is not determined as the remaining period under Article 62 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act or the amount

Considering these circumstances, it is reasonable to calculate the market price of the position of the contractor of the instant pension insurance, which the Plaintiffs had increased, by the termination refund amount of the premium as of the donation date, which is larger than the price assessed by the Plaintiffs.

3. Examining the reasoning of the lower judgment in light of the records, including the evidence duly admitted, in the instant case where, as the policyholders, beneficiaries, and maturity beneficiaries of the instant pension insurance are not freely traded among many and unspecified persons, there is no provision that evaluates their value, and there is no other method of immediately assessing their value, the lower court’s determination that recognized the termination and refund amount of premiums higher than the appraised value of the entitlement to the instant pension insurance under the instant pension insurance as property value for the position of the Plaintiffs as the policyholders of the instant pension insurance, is consistent with the foregoing legal doctrine (see, e.g., Supreme Court Decisions 2015Du4986, Sept. 23, 2016; 2016.

9. Supreme Court Decision 2015Du53046 Decided 28, 201

Therefore, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the evaluation of rights under an insurance contract or the principle of tax equality.

4. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition.