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

Cheong-gu Office

Defendant’s wage and salary income tax for the year 2012, which belonged to the Plaintiff on March 16, 2016

The imposition of KRW 707,073,190 (including additional taxes) and the imposition of KRW 41,39,050 (additional taxes) of corporate tax for the business year 2012 shall be revoked in excess of KRW 851,480.

A. The Plaintiff is an unlisted corporation established around February 2007 for the purpose of designing and developing semiconductor chips for power use, and is confirmed as a venture business subject to illegal application by the Korea Technology Finance Corporation under Article 25 of the former Act on Special Measures for the Fostering of Venture Businesses (amended by Act No. 11660, Mar. 22, 2013; hereinafter “former Venture Business Act”).

B. The Plaintiff’s registered common shares issued by the Plaintiff between officers and employees from March 2008

(hereinafter referred to as "Plaintiff's shares") has entered into a contract that grants stock options with respect to the Plaintiff's shares, and the relevant executives and employees exercised stock options with respect to the total amount of 267,000 shares of the Plaintiff (hereinafter referred to as "first shares of this case") on May 15, 2012, on November 15, 2012, with respect to the Plaintiff's shares total of 81,875 shares of this case (hereinafter referred to as "second shares of this case").

C. Accordingly, Article 60 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11609, Jan. 1, 2013; hereinafter “former Inheritance Tax and Gift Tax Act”) and Article 60 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Act No. 11609

2. Pursuant to Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24358, hereinafter referred to as the “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”), the market price of shares 1 and 2 in this case was calculated (the market price of shares 1 in this case, KRW 4,297, and KRW 4,336) and the difference between the market price and exercise price was withheld and paid to the Defendant.

D. From September 7, 2015 to November 7, 2015, the director of the Central District Tax Office determined the market price of shares No. 1 of the instant case as KRW 10,000 per share, May 15, 2012, and notified the Defendant of the taxation data related to the determination of the market price of shares No. 2 of the instant case as KRW 10,50 per share, May 15, 2013, and the market price of shares No. 2 of the instant case as of May 15, 2013, and notified the Defendant of the taxation data related thereto. On March 16, 2016, the Defendant issued a notice to the Plaintiff on March 16, 2016, of the earned income tax amounting to KRW 707,073,190 (including the amount of withholding tax), and the corporate tax amounting to KRW 41,39,050 (including the amount of unfaithful payment) for the business year 2012.

E. The Plaintiff sought revocation of each of the dispositions of this case and requested an inquiry to the Tax Tribunal, but the Tax Tribunal rendered a decision to dismiss the Plaintiff’s claim on September 21, 2016.

[Reasons for Recognition] Unsatisfy, entry of Gap evidence 1 to 4, 7, and 8, and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) In order to calculate the market price of each of the above shares 1 and 2’s exercise profits

Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24317, Jan. 16, 2013; hereinafter referred to as the "former Enforcement Decree of the Venture Business Act") shall apply to the determination pursuant to Article 11-3(2)1(a) (hereinafter referred to as the "Article 11-3(2)1(a) of the former Enforcement Decree of the Venture Business Act.

2) The former Enforcement Decree of the Income Tax Act (amended by the Defendant, February 2, 2012) cited by the Defendant as the grounds for the instant disposition.

2. Article 98(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588; hereinafter referred to as the “former Enforcement Decree of the Income Tax Act”) provides for the denial of wrongful calculation that does not apply to wage and salary income earners. Since the Plaintiff’s exercise of stock option by executives and employees reduces taxes and does not constitute an unfair act, it cannot be the basis for the instant disposition. Accordingly, each of the instant dispositions in this case, which is subject to the foregoing provision, is unlawful as a disposition without any ground, under Article 89(1) and (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 24357, Feb. 15, 2013) that applies mutatis mutandis pursuant to the foregoing provision, calculated the market price of the instant shares

3) On January 15, 2012, the Defendant’s market price calculated on January 15, 201, based on shares Nos. 1 and 2 in the instant case

The example value and the transaction example value on May 15, 2013 are completely different from each of the above stocks, and thus, it cannot be deemed the price transacted in a similar situation. Each of the above shares is restricted from the disposal of transfer, etc. of shares. In particular, as of May 15, 2012, the Plaintiff’s listing was anticipated, the case where an investment company temporarily purchased shares for the purpose of obtaining listed profits. In the case of a transaction on May 15, 2013, the Plaintiff purchased treasury shares for the purpose of implementing the stock compensation system, and is not a general and continuous transaction. Thus, it is unfair to calculate the market price of the shares No. 1 and No. 2 in this case based on this point. Moreover, in the case of a transaction on May 15, 2013, it cannot be an appropriate transaction case that occurred six months after the date of exercising the stock appraisal right to the shares No. 2 in this case, and thus, the Disposition Act is also premised on this premise.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether the instant provision applies to calculating the exercising profit of the first and second shares in the instant case

In the event that stock options are granted pursuant to Article 16-3 (1) of the former Enforcement Decree of the Venture Business Act, the method under Article 11-3 (1) 2 of the former Enforcement Decree of the Venture Business Act (the method of giving the difference between the exercising price of stock options and the market price as cash or treasury stocks) has been selected, the standard for calculating the difference is only a provision on the standard for calculating the difference. Therefore, it cannot be viewed as a standard for calculating the profit accrued from exercising stock options, which is the earned income subject to income tax, pursuant to Article 38 (1) 1

Therefore, the Plaintiff’s assertion that the instant provision shall apply in calculating the profit from exercising shares Nos. 1 and 2 of this case is without merit.

2) As to the assertion that there is no ground for the instant disposition

A) Legal principles

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 and tax amount 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 the tax authority can determine the legitimacy of the disposition by only the data at the time of the disposition or claim only the reasons for the disposition (see, e.g., Supreme Court Decision 9Du1731, Jun. 15, 2001).

On the other hand, Article 24(2) of the former Income Tax Act (amended by Act No. 11611, Jan. 1, 2013; hereinafter “former Income Tax Act”) provides that the income amount shall be calculated according to the price at the time of transaction when it is imported other than money. As such, the profit from exercising stock options shall be calculated by deducting the actual acquisition price from the stock transaction price as of the date of the exercise (market price) price (see Supreme Court Decision 2007Du5172, Nov. 15, 2007).

B) Determination

In this case, the defendant submitted a written response on June 7, 2017, and the plaintiff stated that each of the dispositions in this case was based on the following grounds: (a) pursuant to Article 20(3) of the former Income Tax Act and Article 38(1)17 of the former Enforcement Decree of the Income Tax Act, the exercising profit of the No. 1 and No. 2 of this case constitutes income subject to income tax and can be calculated according to the value at the time of transaction pursuant to Article 24(2) of the former Income Tax Act; and (b) the court deemed that the defendant made each of the dispositions in this case

Furthermore, each of the above provisions imposes the labor income tax and impose the corporate tax on the premise of such imposition.

Since each disposition of this case can be the basis legislation, the plaintiff's assertion that the basis legislation of each disposition of this case does not exist is without merit.

3) As to the allegation that the criteria for calculating the market price of the first and second shares in this case are unreasonable

A) Article 335(1) of the Commercial Act provides that whether shares No. 1 and No. 2 of the instant case are prohibited from transferring, which cannot be compared to general trading cases, may be transferred to another person, but the transfer of shares may be subject to the approval of the board of directors, as prescribed by the articles of incorporation. However, the proviso to Article 335(1) of the Commercial Act does not provide that the transfer of shares may be prohibited by the articles of incorporation, provided that the purport of the proviso to Article 335(1) of the Commercial Act is premised on the transfer of shares, and that the transfer of shares may be prohibited by the articles of incorporation. Thus, even in cases where the articles of incorporation restrict transfer of shares, there is no provision prohibiting transfer of shares entirely, and such provision of the articles of incorporation is null and void as it completely denies the possibility of recovery of shares invested by shareholders, and even if such content was agreed upon by the company, shareholders, or shareholders, this is also null and void (see Supreme Court Decision 9Da48429, Sep. 26, 2000).

According to the purport of Gap evidence No. 2 and all pleadings, the plaintiff shall state with officers and employees.

In concluding a contract on the grant of the option of purchase, it can be acknowledged that the Plaintiff’s shares are not transferred, donated, or secured to a third party all or part of the stocks acquired by the stock option or the exercise thereof before the stock option is listed on the Korea Exchange or the Korea Stock Exchange.

However, in light of the above legal principles, it is reasonable to deem that the above agreement on the prohibition of transfer is null and void, so long as the first and second shares acquired by the Plaintiff’s executives and employees’ exercise of stock options constitute registered ordinary shares, it can be transferred insofar as they correspond to registered common shares. Thus, it can be viewed that the circumstances that the first and second shares of this case exist under the above agreement on the prohibition of transfer should

shall not be effective.

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

B) Criteria for calculating the market price of unlisted stocks

The former Income Tax Act does not separately stipulate the criteria for calculating the market price of unlisted stocks to calculate the gains from exercising stock options. Therefore, the market price of unlisted stocks may be calculated in accordance with Article 60 of the former Inheritance Tax and Gift Tax Act, which provides for such criteria. If the market price is unclear, the market price may be calculated in accordance with Article 63 of the former Inheritance Tax and Gift Tax Act and Article 54 of the Enforcement Decree

In addition, in the case of unlisted stocks with low market value, the transaction value shall be deemed the market value and the stock value shall be evaluated as the market value. It shall not be evaluated by the supplementary evaluation methods stipulated in Article 63 of the former Inheritance Tax and Gift Tax Act and Article 54 of the Enforcement Decree of the same Act. However, in order for the market value to be recognized as the market value, the transaction value means the objective exchange value formed by the general and normal transaction. Thus, the circumstances that can be seen as properly reflecting the objective exchange value at the time of transfer should be acknowledged (see, e.g., Supreme Court Decision 2010Du26988, Apr. 26, 2012

C) Market price at the time of exercising the instant 1 shares

Facts without dispute, entries in Eul evidence No. 1 (including paper numbers; hereinafter the same shall apply) and the whole pleadings

According to its purport, the Plaintiff’s shareholder held the Plaintiff’s shares on May 4, 2012 and concluded each share sales contract with the CCC beck Investment Company, 09-6mp venture investment association, Chungcheongbuk-do-SVC’s life and solar fund 2, and E&A1. The Plaintiff’s shareholder was determined as KRW 10,000 per share trading price among investment associations, and the sales payment date as of May 15, 2012.

According to the above facts, it is reasonable to view that the above transaction case reflects the market price of the Plaintiff’s stocks around May 15, 2012, which is the date of exercising the Plaintiff’s first stocks, since the investment company or investment association becomes the purchaser of the investment company or investment association, and entered into an autonomous stock sales contract between the Plaintiff’s shareholders. As long as there is no other evidence to acknowledge that the above transaction case was an abnormal transaction with listed profits, it is justifiable for the Defendant to calculate the market price of the

D) Market price at the time of exercising the instant 2 shares

B. According to the purport of each entry and pleading set forth in subparagraphs 2 through 5, the Plaintiff’s 10,200 won per share of the Plaintiff’s Do Investment Fund 1 on June 25, 2012. The Plaintiff concluded a stock sales contract with 0,200 won per share of the Plaintiff’s Do Investment Fund 1. The Plaintiff decided to hold a board of directors on April 3, 2013 to acquire 10,50 won per share of the Plaintiff’s 10,000 shares. Accordingly, the acquisition value per share of 10,000 won per share was paid to the shareholders on May 15, 2013; the acquisition value per share of 10,000 won per share of the Plaintiff’s 20,000 won per share of the Plaintiff’s shares at the time of the resolution of the said board of directors; the average value of the Plaintiff’s shares assessed by 20,01,000 won per share of the Plaintiff’s shares at 30,0, 30,0,0,0000, shares per share price per share.

In full view of the following circumstances, the Defendant’s assessment of the market price at the time of the exercise of the instant shares as KRW 10,500 at the time of the exercise of the instant shares cannot be deemed unfair, taking account of the fact that the transaction value of the Plaintiff’s shares traded on May 15, 2012 was KRW 10,000 per share.

① In light of the fact that the transaction value of the Plaintiff’s shares on May 15, 2012 as of May 15, 2012 is 10,000 won per share, and that the transaction value as of June 25, 2012 is 10,200 won per share, and that the average value of the shares issued by the Plaintiff as of January 31, 2013, which is close to the time of exercising the instant shares, exceeds 10,400 won, it is reasonable to deem that the value of the Plaintiff’s shares was increased compared to the transaction at the time of May 15, 2012 or on June 25, 2012, which is the time of exercising the instant shares.

(2) Inheritance under Article 60(2) of the former Inheritance Tax and Gift Tax Act and Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax

The market price of the property on which tax or gift tax is levied is determined as "if there is a fact of transaction of the relevant property during the period of six months before or after the base date of appraisal (three months in cases of gift tax), the transaction price is determined as "if there is a fact of transaction of the relevant property." Thus, the transaction price of May 15, 2013, which the Plaintiff acquired his/her own shares, is at the time six months after the base date of the exercise of shares No. 2 in this case

③ The value of KRW 10,500 per share determined by the Plaintiff’s transaction on May 15, 2013 may be deemed to properly reflect the objective exchange value as the Plaintiff has assessed the value of his/her own stocks in order to acquire his/her own stocks.

E) Sub-decisions

Therefore, the plaintiff's share that the market price at the time of exercising the shares Nos. 1 and 2 of this case is inappropriate.

The head of the office shall not have reasons.

3. Conclusion

Therefore, each of the claims of the plaintiff in this case is dismissed as it is without merit, and it is so decided as per Disposition.