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

A. At the time of April 30, 2012, the Plaintiffs owned 10,000 shares (the face value per share 5,000 won) issued by all 10,000 shares (the face value per share 5,00 won) as follows.

No.

Equity ratio (%)

Relation with the preceding AA

1

BB

2,500

25

A.

2

PriorCC

2,500

25

Women

3

DaD

2,500

25

Women

4

E

2,500

25

Women

Consolidateds

10,000

100

B. On April 30, 2012, the non-party corporation donated 8,081,443,520 won as well as 1,591,841,312 won as corporate tax for the business year 2012, by appropriating 8,081,420 won as well as 1,591,841,312 won as corporate tax for the business year 2012.

C.** The Director of the Regional Tax Office notified the Defendants of taxation data to the effect that, as the formerA had a special relationship with the Plaintiffs donated the instant real estate to the non-party corporation, increase in the value of the shares of the non-party corporation may be deemed to have received the donation bypass from the formerA having a special relationship.

D. Accordingly, the Defendants: (a) following the Plaintiff’s acquisition of the instant real estate into a corporation that is engaged in real estate leasing business; and (b) the Plaintiff’s acquisition of the instant real estate by the said corporation was converted into a corporation that is engaged in the real estate leasing business; (c) the value of the shares owned by the Plaintiffs was increased by using the “transfer of business” under Article 42(1)3 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014; hereinafter “former Inheritance Tax and Gift Tax Act”); and (d) as such, the Defendants received profits from raising the value of the shares owned by the Nonparty corporation; and (d) pursuant to Article 31-9(1)5(b) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 25195, Feb. 21, 2014; hereinafter the same), the Nonparty corporation’s disposal of the shares before receiving the instant real estate from the A and the shares donated (16684,6060608.60,60860.60

E. Although the Plaintiffs filed an appeal with the Tax Tribunal, the Tax Tribunal dismissed all the Plaintiffs’ claims on October 26, 2016.

F. In the reply submitted on April 17, 2017 after the filing of the instant lawsuit, the Defendants added the grounds that “the Defendants may impose gift tax on the Plaintiffs pursuant to the foregoing provision and Article 31(6)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act,” as the non-party corporation constitutes a corporation under suspension of business under Article 41(1) of the former Inheritance Tax and Gift Tax Act, and that the formerA provided property free of charge to the non-party corporation and donated profits to the Plaintiffs who are shareholders of the said corporation.”

[Ground of recognition] Facts without dispute, Gap evidence 1 through 8, 12, Eul evidence 1 and 9 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) In a case where, during the course of the instant lawsuit, prior to the Defendants’ filing of a lawsuit, “A” provided property without compensation to a non-party corporation, which is a juristic person during the suspension of business and donated profits to the Plaintiffs, who are shareholders of the non-party corporation, the grounds for disposition, which is subject to taxation under Article 41(1) of the former Inheritance Tax and Gift Tax Act, differs

Even if it is possible to add the above disposal reason, the non-party corporation was actually engaged in sales in 201, and was actually engaged in the real estate leasing business, and paid corporate tax on the donation of this case to the non-party corporation. The non-party corporation cannot be deemed as a tool to avoid gift tax. The application of Article 41(1) of the former Inheritance Tax and Gift Tax Act to impose gift tax on the shareholders of the non-party corporation who did not pay corporate tax on the donated property violates the legislative intent of imposing gift tax on the non-party corporation and the principle of tax equality or the principle of excessive prohibition. The non-party corporation does not constitute the non-party corporation under Article 41(1) of the former Inheritance Tax and Gift Tax Act, and thus, the profits earned by the plaintiffs from the donation of the real estate of this case are not subject to taxation under the above provision.

Even if the non-party corporation constitutes a corporation under suspension of business, Supreme Court Decision 2015Du45700 Decided April 20, 2017 ruled that Article 31(6) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act is contrary to the purport of Article 41(1) of the former Inheritance Tax and Gift Tax Act and null and void beyond the scope of delegation. Thus, since there is no provision on the basis of calculating the profits acquired by the plaintiffs, gift tax cannot be imposed on the plaintiffs.

2) Article 42(1)3 of the former Inheritance Tax and Gift Tax Act imposes tax only on the case where the gains from the transfer and transfer of business, change of the corporation’s organization, etc. are incurred due to the transfer of assets, and “business transfer” refers to the transfer of the legal status of the transferor, such as all human and physical rights and obligations, such as business facilities, goodwill, bonds, debts, etc. Therefore, the act of donation of the instant real estate to the non-party corporation does not fall under the transfer and business exchange and business change of the corporation under Article 42(1)3 of the former Inheritance Tax and Gift Tax Act. Moreover, since the non-party corporation paid corporate tax on the increase of net assets by donation of the instant real estate, it cannot be subject to the taxation of the secondary gift tax on the Plaintiffs by applying Article 42(1)3 of the former Inheritance Tax and Gift Tax Act

3) As long as Articles 42(1) and 41(1) of the former Inheritance Tax and Gift Tax Act, which are separate provisions for calculating the value, cannot be applied to the profits earned by the Plaintiffs as a gift of the instant real estate, gift tax cannot be imposed on the Plaintiffs pursuant to Article 2(3) of the same Act, which is a general provision

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) On September 10, 2002, the non-party corporation was a corporation established with the trade name of 'NFFFF' of the corporation on September 10, 2002 with the business of export and import of petrochemicals, wholesale and retail, etc., the trade name was changed to MoHH on January 15, 201, MohHG, Co., Ltd. on March 31, 201. The plaintiffs acquired 25% of the shares of non-party corporation on August 17, 201 and transferred the headquarters to the location of the real estate in this case on the same day.

2) According to the corporate tax return from 2002 to 2012, the revenue amount of the non-party corporation was 1,620,50,756 won for the business year 2002, 468,708,409 won for the business year 2003, 46,312,486 won for the business year 2005, 2006, 2007, 2008, and 2008, the revenue amount was 1,00,000 won for the business year 209, 2009, and 5,127,695 won for the business year 2011, and 60,000,000 won for the business year 2012. However, the revenue amount of the real estate donated after the business year 2012 was ever accrued.

3) The amount of KRW 5,127,695 of the business year of Nonparty 201 consists of KRW 3,127,695 of the sales of the goods and KRW 2,000,000 of other sales. Of these, KRW 3,127,695 of the sales of the goods were supplied by Nonparty 3,115,105 of the Co., Ltd.* Co., Ltd.* 'Coi JJJ' (hereinafter ''CoiJJ') for KRW 3,115,105 on November 15, 201 and supplied KRW 3,127,695 of the same day to KK for KRW 3,127,695 of the same year. At the same time, the CoiJJ was a corporation whose largest shareholder was the representative director, KRW 200 of the business year of 201, KRW 200 of the sales of the goods and KRW 2010 of the Plaintiff’s sales of the goods.

4) On March 23, 2012, the formerA was appointed as the representative director of the non-party corporation. On April 30, 2012, the gift certificate (Evidence A 5) only stated that the formerA donated the instant real estate to the non-party corporation, and there is no separate transfer or acquisition contract for the instant real estate leasing business, such as employment contract. The non-party corporation assessed the instant real estate as the land + KRW 8,239,66,572 + KRW 179,146,252, and reported and paid the asset increase profit8,081,443,520 won to the non-party corporation for the business year 2012,591,841,841,312.

5) On May 8, 2012, a non-party corporation added real estate business, commercial buildings, and land lease business to its business registration. From May 2013, the non-party corporation also received consultation for the development of the instant real estate.

A non-party corporation, around September 2014, demolished the building among the instant real estate, and leased the site as a housing exhibition site or parking lot site from around that time to the end of 2016. On June 17, 2016, entered into a design service contract for constructing an officetel which is a profit-making real estate on the said site, and registered as a housing rental business entity on April 2017.

6) From the date of donation of the instant real estate on April 30, 2012, the non-party corporation accrued the revenue of rent for the instant real estate. From the end of September, 2014, only the Plaintiff B (2,00,000 won per month) and from the Cryi JJJ (5,300,000 won per month) accrued, the non-party corporation leased the instant real estate to Daelim Industrial Co., Ltd. for the exhibition of housing (1-year rent of 990,000,000) from October 2014 to September 2015.

[Ground of recognition] Facts without dispute, Gap evidence 3 through 30, Eul evidence 1 to 20 (including each number), the purport of the whole pleadings

D. Determination

1) Whether the benefit that the Plaintiffs received as a gift of the instant real estate is taxable under Article 41(1) of the former Inheritance Tax and Gift Tax Act, and Article 31(6) of the former Enforcement Decree of the Inheritance Tax and Gift Tax

(A) the addition of the reasons for the disposition

Since the subject matter of a taxation disposition lawsuit is objective existence of the tax amount determined by the tax authority, the tax authority may submit new data that can support the legitimacy of the tax base or amount of tax recognized in the relevant disposition, or exchange and change the reasons within the scope that maintains the identity of the disposition, and it does not necessarily mean that only the data at the time of the disposition should be determined whether the disposition is lawful or only the reasons for the disposition at the time of the disposition can be asserted (see, e.g., Supreme Court Decisions 2001Du1994, Oct. 11, 2002; 2009Du1617, Jan. 27, 2011).

The grounds for the initial disposition of this case and the grounds for the main disposition of this case were added to the non-party corporation holding 100% of the stocks of this case, and only the composition of taxation requirements and legal evaluation are different with respect to the objective facts that the formerA donated the real estate of this case to the non-party corporation holding 100% of the stocks of this case, and it does not change the taxable unit composed of the taxpayer, taxpayer, tax item, and taxable period. Thus, the additional grounds for the disposition of the Defendants

B) The legislative purport of Article 41(1) of the former Inheritance Tax and Gift Tax Act

(1) Article 41(1) of the former Inheritance Tax and Gift Tax Act provides for the calculation of the value of donated property subject to gift tax in cases where the gains earned by shareholders, etc. are at least KRW 100 million by making transactions, such as providing assets free of charge, to a corporation with losses or a person having a special relationship with shareholders or investors (shareholders, etc.) of a corporation under suspension or discontinuance of business or closure of business. This purpose is to impose gift tax on a corporation subject to gift tax on an irregular donation that provides profits to shareholders, etc. of a specific corporation without bearing corporate tax on the donation amount by means of offsetting the donation amount by donation of assets to a corporation as losses. In other words, each of the above provisions provides for the calculation of donation gains within the scope of losses in cases of a corporation other than a corporation subject to suspension or discontinuance of business, and limits the scope of application in cases of a corporation subject to suspension of business or closure of business to a corporation subject to gift tax. Thus, since the legislative intent is to exclude profits acquired by a corporation and shareholders, etc. from the gift tax assessment.

(2) In this case, where a corporation under suspension or discontinuance of business receives property free of charge from a person in a special relationship with a stockholder, etc. and pays corporate tax on the relevant donation amount, the issue that the corporation does not bear corporate tax, unlike the case of loss corporation does not occur.However, even in this case, the shareholder, etc. of the corporation under suspension or discontinuance of business gains profits from the property donated to the corporation under suspension of business. Article 41(1) of the former Inheritance Tax and Gift Tax Act provides that the gift tax may be levied on the profits that the corporation under suspension or discontinuance of business without asking whether the corporation under suspension or discontinuance of business has paid corporate

The above provision is exceptionally included in the subject matter of taxation only in case of a juristic person under suspension or discontinuance of business among black corporations. This provision is based on the fact that, unlike a juristic person normally engaged in business activities, shareholders acquire the shares without paying a large amount of price for business purposes, and thus it is easy for the juristic person to use the shares as a means of avoiding gift tax even if they obtain the same effect as receiving property from a specially related person by using the shares, and that the juristic person under suspension or discontinuance of business can easily specify the profits earned by the shareholders from the donation to the juristic person in question because there is no other income gained from business activities. Furthermore, Article 41 of the Inheritance Tax and Gift Tax Act (amended by Act No. 12168, Jan. 1, 2014) amended by Act No. 12168 of Jan. 1, 2014 is also included in the subject matter of taxation by including some of the controlling shareholders and their relatives in the subject matter of taxation. In light of the language, legislative intent, amendment history, etc. of the above provision, it cannot be deemed excluded from the subject matter of the above provision.

Therefore, in case where a person with special interest, such as a shareholder, etc., provided property free of charge to a corporation under suspension or discontinuance of business, a gift tax can be levied on profits earned by a shareholder, etc. of a corporation under suspension or discontinuance of business regardless of whether the corporation under suspension or discontinuance of business paid corporate tax on the value of donated property.

C) Whether the non-party corporation constitutes “the corporation under suspension or discontinuance of business” under Article 41(1) of the former Inheritance Tax and Gift Tax Act at the time of donation of the instant real estate

(1) The prior meaning of “suspension of business” is the temporary suspension of business, business, and work, and one or more rests per day. However, considering the legislative intent and subject matter of regulation under Article 41(1) of the former Inheritance Tax and Gift Tax Act, the suspension of business under the above provision does not include the cases where the business is discontinued for a considerable period of time during which the business is continuously operated, but the business operator temporarily suspends his/her main business, but intends to resume his/her future business, and refers to the cases where the business operator discontinues his/her business continuously and does not perform any further business activity. Whether the business is the suspension or discontinuance of business should be determined by the substance of the business, regardless of the registration under the Act, taking into account the characteristics and objective operational status of the business, the subjective intent of the business operator, etc.

(2) In full view of the following circumstances revealed by adding up the purport of the entire pleadings, it is reasonable to deem that the non-party corporation was a corporation under business suspension or closure at the time of April 30, 2012, which was the donation date of the real estate of this case. Therefore, with respect to the profits that the Plaintiffs acquired as a donation of the real estate of this case, gift tax may be imposed on the profits that the Plaintiffs acquired as a donation of the real estate of this case based on Article

① The non-party corporation is a corporation whose primary business is export and import business and wholesale and retail business from 2002 to 2004, but there was little amount of revenue since 2005. The non-party corporation reported the corporate tax that the small amount of revenue occurred since the business year 2009. However, if the Plaintiffs were to acquire the non-party corporation, the sales prior to the acquisition of the non-party corporation were to be supplied with the same address as that of the non-party corporation at the time. The sales accrued after the Plaintiffs acquired the non-party corporation, and there is a doubt about the authenticity of the sales. Accordingly, the non-party corporation appears to have been in the status of suspending or discontinuing the business for a long time since 2005, and the non-party corporation cannot be deemed to have resumed its business at that time only by means of a lump sum sales that occurred around 2009.

② Determination as to whether a non-party corporation was in suspension or discontinuance of business ought to be made on the basis of the date of donation of the instant real estate. However, even after August 17, 201, the Plaintiffs acquired the shares of the non-party corporation, there was only a small amount of sales suspected of truth as seen above prior to the donation of the instant real estate, and the non-party corporation accrued rental income from the donation of the instant real estate. However, around September 2012, the non-party corporation’s income accrued from the lease of the instant real estate to the removal of the building among the instant real estate and lease of the site to a third party. Moreover, from around September 2009, there was a small amount of sales from the date of donation of the instant real estate to April 30, 2012, which was the date of donation of the instant real estate, there was no wage, rent, and entertainment expenses.

③ Even according to the Plaintiffs’ assertion, the Plaintiff acquired the shares of the non-party corporation for the purpose of running the real estate rental business, which is entirely different from the previous purpose business of the non-party corporation, using the instant real estate at the beginning of the year. The instant real estate is an essential asset for business purposes

Therefore, it is difficult to view that the non-party corporation engaged in the real estate leasing business before receiving the donation, and there is no reason to deem that the non-party corporation actually engaged in any specific activity, such as preparation or execution for the real estate leasing business, around the date of donation of the real estate in this case. In light of the fact that the first proposal (Evidence A) was prepared on or around May 2013, which was more than one year after the date of donation of the real estate in this case and more than one year since the date of donation of the real estate in this case, the non-party corporation started preparation for the construction of officetels and the real estate leasing business after a considerable period of time from the date of donation of the real estate in this case. The preparation for the business for the real estate leasing business, etc. commenced after the donation of the real estate in this case, could not affect the determination of whether the non-party corporation was suspended or closed at the time of donation of the real estate in this case, and the above real estate leasing business was completely discontinued or permanently discontinued

D) Whether taxation is impossible on the grounds that the Plaintiffs cannot calculate the profits they acquired

(1) Article 41(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003; Act No. 9916, Jan. 1, 2010; hereinafter referred to as "the former Inheritance Tax and Gift Tax Act") provides that where a person who has a special relationship with a shareholder or investor of a corporation (specific corporation) who has losses or is under suspension or closure of business, obtains the profits through transactions falling under any of the following subparagraphs with the specific corporation, the amount equivalent to the profits shall be deemed the value of the property donated to the shareholder or investor of the specific corporation. Paragraph (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 1817, Dec. 30, 2003; hereinafter referred to as "the former Enforcement Decree") provides that where the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 25195, Feb. 21, 2014>

Article 203 of the former Enforcement Decree of the amended Act delegates only "the calculation of the profit" to the Enforcement Decree on the premise that the largest shareholder, etc. has obtained the profit through a certain transaction with a specific corporation, but the amended Enforcement Decree of the 2003 shall be deemed to be "the profit the profit the shareholder, etc. has acquired" and shall be calculated as "the profit the shareholder, etc. has acquired". In addition, according to the former Enforcement Decree of the amended Act, even if there is no profit the shareholder, etc. has acquired the profit by the actual provision of property for a specific corporation, it may be excluded from the subject of gift tax. However, according to the Article 203 of the former Enforcement Decree of the amended Act, if there is no profit the shareholder, etc. has acquired the profit by free provision of property for a specific corporation, it shall be deemed that the shareholder, etc. has obtained the profit by itself and shall be liable for gift tax liability. Ultimately, the former Enforcement Decree of the amended Act of the 2003 is contrary to the purport of the provisions of the former Act before the amended corporation (see en banc Decision 200

(2) Meanwhile, Article 41(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as "the amended provision") is partially amended to mean "where a shareholder, etc. of a specific corporation has obtained a benefit as prescribed by Presidential Decree". However, the amended provision of 203 has been maintained before the amendment by Presidential Decree No. 25195, Feb. 21, 2014. However, in light of the taxation system of gift tax and the concept of donated property, it is reasonable to assume that a shareholder, etc. has gained a benefit equivalent to donated property under the Inheritance Tax and Gift Tax Act by providing property to a specific corporation without compensation. Inasmuch as the other party, such as provision of property without compensation, is a specific corporation, it is difficult to view that the amended provision of 200-year benefit, such as provision of property at issue, is deemed as null and void, regardless of the extent of increase in the value of shares held by the specific corporation."

(3) Article 203 of the Enforcement Decree of the 2003 amended as of February 21, 2014, which was enforced at the time of the date of donation of real estate, is null and void for the same reason, and thus, it cannot be applied to this case. However, in such a case, the benefit that a shareholder, etc. may gain by applying the preceding provision of the Enforcement Decree of the Amended as of February 21, 2014 can be calculated (see Supreme Court en banc Decision 2006Du19693, Dec. 30, 2003). As to this, Article 31(6)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 18177, Dec. 303) provides that "the amount calculated by multiplying the value of the shares increased by the value of donated property by the number of shares of the relevant shareholder," and this provision also accords with the purport of the en banc Decision 2015Du4570, supra.

Meanwhile, pursuant to Article 42(1)3 of the former Inheritance Tax and Gift Tax Act, and Article 31-9(1)5(b) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, which the Defendants asserted as the cause of disposal, the amount calculated by subtracting the stock evaluation value before being donated from the stock evaluation value after the donation of the instant real estate shall be deemed as the value of donated property, and thus, the Plaintiffs shall be deemed as the gains from donation, and the disposition in this case was rendered based on the same. However, this is identical to the calculation method of the gains from donation under Article 31(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act before the amendment by Presidential Decree No. 18177, Dec. 30, 203. As such, the

(4) As such, the profit gained by the Plaintiffs can be calculated under Article 31(6) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act prior to the amendment by Presidential Decree No. 18177 of December 30, 203, and Article 41(1)1 of the former Inheritance Tax and Gift Tax Act. Since the calculation method of the tax amount imposed by the Defendant against the Plaintiffs is the same as this, the prior Plaintiffs’ assertion on the different premise is without merit.

2) Sub-committee

The instant disposition based on Article 41(1)1 of the former Inheritance Tax and Gift Tax Act is lawful.

3. Conclusion

Therefore, without any further review as to the plaintiffs' conjunctive disposition and the remaining arguments on such disposition, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so decided as per Disposition.