Article 36 (Liabilities Deducted from Taxable Value of Gift Tax)

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

A. On January 14, 2005, the Plaintiff entered into a donation contract with his father Kim○-○○○○○○○○-dong, ○○○○○○-dong, ○○○○○○○-dong, ○○○○○○○○ (hereinafter “instant real property”), and completed the registration of ownership transfer on January 17, 2005.

B. On February 17, 2005, the Plaintiff reported the gift tax amount of KRW 940,000,000,000,000, which is donated property, to the Defendant, and the amount of the obligation assumed by the Plaintiff as KRW 940,00,00,000.

C. On May 23, 2006, the Defendant denied the deduction of the obligation acquisition amounting to KRW 940 million from the gift value of the instant real estate and imposed KRW 96,096,000 on the Plaintiff (hereinafter the instant disposition of imposition of gift tax) on the Plaintiff, on the ground that the amount of the loan obtained by taking the instant real estate as security was only KRW 440,000,000,000, among the obligations owed to ○○○○○○ Bank Co.,, Ltd. (hereinafter the instant obligation), which was alleged by the Plaintiff to have taken over from ○○○○○○○ (hereinafter the instant obligation) (hereinafter the instant disposition of imposition).

(A-3, 5, 1 and 2, respectively, and the purport of the whole pleadings and arguments)

2. The legality of disposition.

A. The parties' assertion

(1) The plaintiff's assertion

At the time of donation of the instant real estate from ○○○○, the Plaintiff took over all the obligations of KRW 940 million (the maximum amount of claims KRW 1.22 billion) that the ○○○○○○○○○○, which was loaned the instant real estate from ○○○○ Bank as collateral. Therefore, it is apparent that the instant obligation KRW 500 million, among the obligations of KRW 940,000,000, which the Plaintiff acquired, is also an obligation secured by the instant real estate, and it is apparent that the Plaintiff was taken over as an obligation secured by the instant real estate, and thus, in calculating the taxable value of gift tax pursuant to Article 47(1) of the Inheritance Tax and Gift Tax Act

Even if not so, the plaintiff acquired the obligation of this case in return for the acquisition of the real estate of this case. Therefore, the part on the above KRW 500 million among the real estate of this case is not substantially donated by Kim○-○, but transferred at a cost.

Therefore, even though the debt amount of this case should be deducted from the donation amount for the real estate of this case, the defendant's disposition of this case which did not recognize it is unlawful.

(2) The defendant's assertion

The amount of money that ○○ Kim ○ obtained from ○○ Bank as a collateral for the instant real estate is not more than KRW 440 million, and the remaining KRW 500 million is not a loan obtained with the instant real estate as collateral, and thus, in calculating the gift value of the instant real estate, it shall not be deducted.

Even if not, the Plaintiff’s acquisition of the obligation of this case from Kim○○ does not seem to be a genuine assumption of the obligation.

Therefore, the defendant's disposition of this case is legitimate.

(b) Related statutes;

○ Consumed donation at the time of transfer to the spouse, etc. under Article 44 of the Inheritance Tax and Gift Tax Act

(1) Property transferred to a spouse, or lineal ascendants and descendants (hereafter in this Article, referred to as "spouse, etc.") shall be presumed to have been donated by the spouse, etc. at the time when the transferor transfers the relevant property, and shall be deemed to have been donated

(2) omitted.

(3) Paragraphs (1) and (2) shall not apply to cases falling under any of the following subparagraphs:

1.-4. Omitted

5. Where it is evident that his/her spouse, etc. has received compensation and transferred it as prescribed by Presidential Decree.

(4) omitted.

Article 47 of the Inheritance Tax and Gift Tax Act

(1) The taxable amount of gift taxes shall be the sum 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 excluded from summing up")] minus the amount taken over by donee as debts (including debts prescribed by the Presidential Decree, such as debts, etc. related to the relevant donated property) secured with the relevant donated property.

(2) omitted.

(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 concerned shall be presumed not to have taken over the obligation of the donee: Provided, That this shall not apply where the amount of the obligation concerned is objectively recognized as prescribed by the Presidential Decree,

○ Method of proving obligations under Article 10 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act

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

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 persons other than those under subparagraph 1, shall be verified by a contract for debt-bearing, a creditor's confirmation, documents evidencing the establishment of security and payment of interest, etc.

(2) omitted.

Article 33 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, at the time of transfer to the spouse

(1), (2) omitted

(3) The term "cases prescribed by Presidential Decree" in Article 44 (3) 5 of the Act means cases falling under any of the following subparagraphs:

1. Where properties are exchanged for each other, which require registration or enrollment in the transfer or exercise of rights;

2. Where it is proved that the payment of the income amount which has already been taxed (including the cases of non-taxation or reduction) or reported, or the price of inheritance and inheritance properties has already been made, for the acquisition of the relevant properties.

Article 36 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act is deducted from the taxable amount of gift tax.

(1) The term “liability prescribed by the Presidential Decree” in Article 47 (1) of the Act means the relevant rental deposit in case where the donor leases the relevant property to another person.

(2) "Cases objectively recognized under the conditions as prescribed by Presidential Decree" in the proviso to Article 47 (3) of the Act means the cases proved under one of the subparagraphs of Article 10 (1).

○ Definition of transfer Article 88 of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006)

(1) "Transfer" in Article 4 (1) 3 and this Chapter means that any assets are actually transferred for price due to sale, exchange, investment in kind in a corporation, etc., regardless of any registration or enrollment concerning such assets. In such cases, where a donee takes over any obligation of a donor of an onerous donation (excluding cases falling under the main sentence of Article 47 (3) of the Inheritance Tax and Gift Tax Act), the portion equivalent to the amount of such obligation in the donation amount shall be deemed to be actually transferred

(2) The omission end.

(c) Fact of recognition;

(1) Around March 29, 2004, ○○○ borrowed 940 million won in total, including 500 million won as security, from ○○ Bank, as security, the Plaintiff’s deposit amounting to KRW 40 million in ○○ Bank and KRW 500 million in ○○ Bank.

(2) The copy of the deposit passbook (A No. 4) with respect to Kim○-○ is written out that Kim○-○ loaned KRW 50 million from the ○○ Bank on March 29, 2004 and paid the interest of KRW 240,000 per month on January 31, 2005.

(3) The reply to the inquiry of the details of collateral regarding the creation of a collateral (Evidence No. 3) prepared by the head of the ○○○○○○○ Branch Office stated that the secured loan amount of the instant real estate is KRW 440 million, and the loan of the household general fund with the security of time deposit is KRW 500 million.

(4) The contract for onerous donation (Evidence A) drawn up by the Plaintiff and Kim○○ on January 14, 2005 states that “The donor agrees to make an onerous donation of the said real estate to a witness, together with the daily amount of KRW 940,000,000 (the maximum bond amount of KRW 122,200,000,000) loaned by the donor at ○○○○○○○○○○○○○○○○ branch on the said real estate as collateral.”

(5) On March 25, 2004, ○ Bank set the right to collateral security with the maximum debt amount of 1.222 billion won for the instant real estate and the debtor Kim○-○. On February 1, 2005, the said right to collateral security was changed to the plaintiff by the debtor on the ground of acceptance of the contract on the same day.

(Evidence Nos. 1 to 5, Nos. 1 to 3, and the purport of the whole pleadings)

D. Determination

(1) Determination as to whether the pertinent donated property is a debt secured

Pursuant to Article 47 (1) of the Inheritance Tax and Gift Tax Act, in order to have the donee receive from the aggregate of the value of the donated property, the amount of obligation secured by the donated property shall be deducted.

However, in light of each description of a deposit passbook (No. 4) with a loan amount of KRW 500 million or an inquiry about the details of collateral regarding the creation of collateral (Evidence No. 3) with respect to the creation of collateral security, the evidence submitted by the Plaintiff alone, including the circumstance that the maximum debt amount of collateral security established on the instant real estate is KRW 1.22 billion, is insufficient to recognize that the instant key debt claimed by the Plaintiff is a debt secured on the instant real estate, and there is no other evidence to acknowledge it otherwise.

Therefore, this part of the plaintiff's assertion is without merit.

(2) Determination as to whether a transfer for consideration constitutes a transfer for consideration

In case of onerous donation, the reason why the donee deducts the debts assumed by the donor from the donated value is that the donee takes over the debts from the donor and pays money equivalent to the debts to the donor (i.e., taking over the debts of the donor is the economic same as paying money to the donor, the donee pays to the donor for his/her own debts, and the donee borrowed money again from the creditor). This is because the part equivalent to the debts of the donated property is not a donation, but it is deemed that the donee takes over for consideration rather than a donation. In the case of onerous donation under the proviso of Article 88 of the former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006), the part equivalent to the debts taken over by the donee is regarded as the onerous transfer of assets.

However, since the donor and the donee most closely related to a relationship, there are cases where the donee take over a false obligation from the donor or takes over a false obligation, Article 47 of the Inheritance Tax and Gift Tax Act requires strict requirements and proof for the obligation to be deducted from the donated property in a onerous donation. However, even if the donee proves that the donee takes over a true obligation from the donor, if it is proved that the donee takes over a true obligation from the donor, the part of the donated property equivalent to the amount of the obligation is not donated by the donee, and thus, gift

However, in full view of the facts acknowledged earlier, such as the fact that the debtor of the issue of this case has been changed from ○○ Bank to the plaintiff, that the obligation of this case is the obligation against the financial institution under Article 10 (1) 1 of the Inheritance Tax and Gift Tax Act, that is, Kim○○ appears to have repaid interest on the above obligation only until January 31, 2005, which is the time of the donation of this case, and that the deposit of the plaintiff against ○○ Bank is offered as security for the issue of this case, the obligation of this case seems to have been actually and appropriately taken over by the plaintiff. Thus, the part equivalent to the obligation of this case among the real estate of this case is deemed to constitute the transfer of the value of assets not donated (if the above obligation is repaid only by Kim○○, it would be necessary to impose gift tax on it, and therefore, it does not change the above part of the transfer for

Therefore, the plaintiff's argument to the above purport is with merit, and the defendant's argument against this is without merit.

3. Conclusion

Therefore, the defendant's disposition of this case is unlawful, so it is decided as per Disposition by cancelling it.