Article 47-5 of the Framework Act on National Taxes (Additional Taxes for Insincere Payment and Refunding Return)

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

Cheong-gu Office

The Defendant’s imposition of global income tax of KRW 375,641 as global income tax for the year 2001, and KRW 91,215,095 as global income tax for the year 2003 as of November 15, 2006, shall be revoked.

A. During the period from January 1, 1999 to December 31, 2004, the Plaintiff acquired and transferred a total of 21 real estate including multi-household houses, apartment houses, commercial buildings, sites, forests, etc. (hereinafter “instant real estate”) under its own name. The Plaintiff reported and paid the acquisition tax, gift tax, and capital gains tax accordingly as shown in attached Table 1.

B. The Defendant deemed that the Plaintiff engaged in real estate sales business under Article 34 of the Enforcement Decree of the Income Tax Act during the above period, and accordingly notified the Plaintiff of each of the global income tax for 2001: (i) KRW 305,524 + penalty tax of KRW 307,784 + penalty tax of less than KRW 107,784; and (ii) global income tax of KRW 106,765,60 for 203 November 15, 2006 (=principal tax of KRW 73,263,888 + penalty tax of KRW 34,082,360 + penalty tax of KRW 580,640 for 580,640, and less than KRW 10).

C. On Jan. 12, 2007, the Plaintiff filed a request for a national tax trial on Jan. 12, 2007. In light of the fact that the National Tax Tribunal, after the Plaintiff transferred the instant real estate, recognized the gains as transfer income and reported the gains as transfer income, the Plaintiff decided not to impose a tax on negligent tax returns on the ground that it does not appear to have been falsely reported for the purpose of reducing tax burden, and that part of the Plaintiff’s assertion on the acquisition value of the instant real estate and necessary expenses were accepted.

D. According to the above determination, the Defendant corrected the total income tax for 2001 to KRW 375,641 (=the principal tax for 207,824 + the additional tax for 167,817 + the additional tax for 2003 + the global income tax for 2003 + KRW 91,215,095 (the main tax for 72,554,326 + the additional tax for 19,241,407 - the already paid tax amount for 580,640) (hereinafter “instant disposition of imposition”).

Facts without any dispute, Gap evidence 17-1, Gap evidence 18-1, Gap evidence 19, Gap evidence 20, Eul evidence 1-1 through 4, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case is unlawful on the following grounds.

(1) The act of transferring and taking over the instant real estate was all of the Plaintiff’s wife, Kim ○, and the Plaintiff only lent only the name in the process. Thus, the instant disposition against the Plaintiff is unlawful as it goes against the principle of substantial taxation.

(2) Even if there is no suspicion, among the instant real estate, the Seoul ○○○○ 338-50 square meters of land (hereinafter “○○○○ site”) transferred to year 2003 among the instant real estate was placed under title trust with the Plaintiff as a property division, by arranging the relationship between the Plaintiff’s father and Kim Jong-nam, who was in a de facto marital relationship with the Plaintiff, and thus, at least 00 square meters of land should be imposed a separate transfer income tax rather than the global income tax on the Plaintiff.

(3) To acquire Incheon ○○○○○○ 520-2203 and Incheon ○○○○ 530-19 101 among the instant real property, the amount of KRW 7,00,000 shall be additionally recognized as necessary expenses in 2001, since it paid KRW 7,00,000 to ○ Real Estate Brokerage Co., Ltd. with auction commission and surrender commission.

(4) The acquisition value to be included in the necessary expenses at the time of calculating the total amount of revenue related to the ○○○ site should be assessed to be at least KRW 260 million, which is the actual value paid by Kim Nam at the time of acquiring the ○○○ site, or at least KRW 50 million,000,000, which is the secured claim of the right

(5) In light of the fact that the Defendant imposed an additional tax for unfaithful payment on the Plaintiff under the Framework Act on National Taxes (the additional tax for unfaithful return was already revoked in the adjudication decision), the Plaintiff’s transfer of the instant real estate, identified the gains as capital gains tax, reported and paid capital gains tax, and the Plaintiff’s payment of capital gains tax on gains from the transfer of the ordinary real estate was not intentionally reported differently from the fact for the purpose of reducing tax burden, and the Plaintiff’s payment of income tax on gains from the transfer of the ordinary real estate was not intentionally made, there is a justifiable reason that the Plaintiff did not pay this portion of

(b) Fact of recognition;

(1) During the period from January 1, 1999 to December 31, 2004, the Plaintiff acquired a total of 21 real estate, including multi-household houses, apartment houses, commercial buildings, sites, forests, etc., under the name of the Plaintiff and transferred it in a relatively short period. The relevant documents, such as contracts and receipts, related to the sale and purchase of the instant real estate, are all the Plaintiff’s name, and the construction permission for the instant ○○ site is also the Plaintiff’s name.

(2) From around 1994, Kim Jong-soo, the Plaintiff’s wife, maintained a de facto de facto marital relationship with Kim Jong-nam. Since around 1999, Kim Jong-nam paid ○○○○○○○○○○ located in Seoul, ○○○○○○○○○ located in around 1999 (Lease), Incheon ○○○○○○○○○○○○○○○○○, 2-301, and cash 10 million won, and acquired ○○○○○○○ site through exchange. After resolving a de facto de facto marital relationship with Kim○○ on around 200, it completed the registration of ownership transfer to the Plaintiff on the ○○ site on the ground of donation on June 25, 201.

(3) On June 28, 2001, after the registration of transfer of ownership in the name of the Plaintiff on the site of ○○○○ was made, the registration of creation of the right to collateral was made on June 28, 2001, with a maximum amount of KRW 75,000,000 for the debtor Kim○, the mortgagee of the right to collateral security, and the maximum amount of the claims (cancellation on December 10, 2001). Although the original Kim○ stated that the establishment was made by borrowing KRW 70,000 from the right to collateral, the right to collateral security was only lent to the head of the office of a certified judicial scrivener at the time of the defendant’s investigation, and the right to collateral security was entirely known to the head of the office of a certified judicial scrivener at that time. This was submitted to the defendant on August 3, 2007. However, even though the plaintiff or Kim○○, the loan certificate or the receipts and other objective documents were not submitted.

(4) Meanwhile, the Plaintiff filed a report on acquisition tax, gift tax, transfer income tax, etc. under its own name at all times immediately after the transaction related to the instant real estate, and otherwise, there is no objective data to deem that Kim ○ was raising funds to sell the instant real estate or required expenses, or actually brought about profit margins.

Facts without any dispute over recognition, Gap evidence 1, Eul evidence 3-1, Gap evidence 5, Gap evidence 8-12, Eul evidence 14-1, Eul evidence 4-1, Eul evidence 5, and the purport of the presumption of pleading.

(c) Related statutes;

Article 14 (Real Taxation of Framework Act on National Taxes)

(1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal and a person to whom such ownership belongs exists, the tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

(2) The provisions concerning the calculation of tax base in tax-related Acts shall apply according to the substance, notwithstanding the name or form of income, profit, property, act or transaction.

○ Article 47-5 of the Framework Act on National Taxes (Additional Tax on Payment and Refund Indecent Payment)

(1) Where a taxpayer fails to pay national taxes by the due date for payment under tax-related Acts or the paid tax amount is short of the payable tax amount, the amount calculated by applying the following formula shall be added to the payable tax amount or deducted from the refundable tax amount:

The interest rate prescribed by the Presidential Decree in consideration of the interest rate, etc. applied by X financial institutions to overdue loans from the day following the payment deadline for the unpaid or underpaid tax amount to the date of voluntary payment or payment notice.

○ former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006)

Article 19 (Business Income)

(1) Business income shall be the following income generated during the relevant year:

12. Incomes accruing from real estate sales business determined by the Presidential Decree;

(2) The business income shall be the amount obtained by deducting the necessary expenses required therefor from the gross income amount in the current year.

(3) Matters necessary for the scope of business income shall be prescribed by Presidential Decree.

○ former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173, Dec. 30, 2003)

Article 55 (Calculation of Necessary Expenses for Real Estate Rental Income, etc.)

(1) Necessary expenses corresponding to the total amount of income from real estate rental and business income for each year shall be as follows:

1. Purchase price (excluding a purchase reduction or a purchase discount) of the raw materials for the commodities or products sold and the incidental expenses thereto. In this case, the original purchase price and incidental expenses thereto shall be applicable, if the relevant business operator has consumed such ones for a business use, as have been purchased for other purposes;

2. Book value at the time of transfer of real estate (limited to housing construction and sales business and real estate sales business). In this case, with respect to real estate acquired for any purpose other than business, the acquisition value calculated by applying mutatis mutandis the provisions of Article 89 at the time of the initial acquisition by the relevant

○ former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173, Dec. 30, 2003)

Article 89 (Acquisition Value of Assets, etc.)

(1) The acquisition value of assets under Article 39 (2) of the Act shall be based on the following amounts:

1. For assets purchased from a third person, the amount calculated by adding the acquisition tax, the registration tax and other incidental expenses to the purchase price;

2. The aggregate amount of the raw material cost, labor cost, freight, loading and unloading cost, insurance premium, fees, public charges (including acquisition tax and registration tax), installation cost, and other incidental expenses, for assets acquired through the manufacture, production, construction, etc. of the person concerned;

3. For assets under subparagraphs 1 and 2, the acquisition value of which is unclear, and assets other than the assets under subparagraphs 1 and 2, the amount calculated by adding the acquisition tax, the registration tax, and other incidental expenses to the market price as determined by the Ordinance of the Ministry of Finance

○ Enforcement Rule of the former Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 424, Mar. 19, 2005)

Article 48 (Calculation of Market Price)

"Market price prescribed by the Ordinance of the Ministry of Finance and Economy" in Article 89 (1) 3 of the Decree means the amount calculated in accordance with Article 89 of the Enforcement Decree of the Corporate Tax Act.

○ former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 18174, Dec. 30, 2003)

Article 89 (Scope of Market Price, etc.)

(1) In the application of the provisions of Article 52 (2) of the Act, if there is a price generally traded between many and unspecified persons other than a person with a special relationship or between a third party who is not a person with a special relationship, the price shall apply.

(2) In applying Article 52 (2) of the Act, if the market price is unclear, the amount calculated by applying in sequence the provisions in each of the following subparagraphs:

1. Where there is a value appraised by an appraisal corporation under the Public Notice of Values and Appraisal of Lands, etc. Act, that value: Provided, That this shall not include stocks, etc. not listed on the

2. The amount passed by complying with the provisions of Articles 38 through 39-2, and 61 through 64 of the Inheritance Tax and Gift Tax Act.

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003)

Article 61 (Appraisal of Real Estate, etc.)

(1) Real estate shall be appraised by the following methods:

1. Land:

The individual officially assessed land price under the Public Notice of Values and Appraisal of Lands, etc. Act (hereinafter referred to as the “individual assessed land price”): Provided, That the value of the land for which no individual assessed land price exists, shall be the amount assessed by the superintendent of the competent tax office by the method as determined by the Presidential Decree, taking into consideration the individual publicly notified persons of similar lands in

2. Buildings:

The value calculated and publicly announced by the Commissioner of the National Tax Service at least once a year in consideration of the new construction price, structure, use, location, year of new construction, etc.

(2) Deleted. < by Act No. 6302, Dec. 29, 2000>

(3) Notwithstanding the provisions of paragraph (1), the value of land and buildings shall be appraised at least once a year by the Commissioner of the National Tax Service in consideration of the types, scale, transaction conditions, etc. of property for multi-family housing in an area designated by the Commissioner of the National Tax Service as multi-family housing sharing the land attached to the

(4) The term "ratio method" in the proviso to paragraph (1) 1 means the method of calculating based on the amount calculated by multiplying the officially assessed individual land price by the ratio determined by Presidential Decree.

(5) The value of superficies and real estate rights and rights to use specific facilities shall be the value appraised by such methods as prescribed by Presidential Decree in consideration of the remaining period, character, content and transaction conditions of the relevant rights, etc.

(6) Other facilities and structures shall be the value appraised by the methods prescribed by the Presidential Decree in consideration of the value necessary for the re-construction or re-acquisition on the evaluation base date.

(7) In cases of property the lease contract of which is de facto concluded or the lease of which is registered, the larger amount between the value assessed on the basis of rent, etc. as prescribed by the Presidential Decree and the value assessed under the provisions of paragraphs (1) through (6).

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003)

Article 62 (Appraisal of Vessels and Other Tangible Assets)

Details omitted

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003)

Article 63 (Appraisal of Securities, etc.)

Details omitted

○ former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003)

Article 64 (Appraisal of Intangible Property Rights, etc.)

The content omitted.

D. Determination

(1) The assertion that it is merely a nominal loan (including ○○ site)

(A) In light of the principle of substantial taxation under Article 14(1) of the Framework Act on National Taxes, if the ownership of the income, profit, property, act or transaction subject to taxation is merely nominal and there is another person to whom it actually belongs, the person to whom it actually belongs shall be the person to whom it actually belongs shall be the person to be the taxpayer. However, the claimant has the burden of proving the special circumstance.

(B) However, as seen above, the real estate of this case including the ○○ site is prepared in the Plaintiff’s name, including the relevant sales contract, receipts, and building permission, as well as all related sales contract, and it is recognized that the Plaintiff paid the acquisition tax, gift tax, and transfer tax following the Plaintiff’s transaction immediately after each transaction, and otherwise, it is difficult to view that the expenses and profits from the transaction were entirely reverted to the Kim○, i.e., the expenses and profits from the transaction. Thus, the testimony of the Plaintiff’s 3-3 and 26-3 and the testimony of the 3-4-8, A-6-1 and 21-1 and 27-3, A-1 and 27-3-1 to 28-3, and there is no other evidence to acknowledge the Plaintiff’s assertion.

(C) Therefore, the Plaintiff’s assertion on this part is without merit.

(2) The assertion that the auction commission and the lush cost of KRW 7,000,000 should be considered as the necessary expense in 2001.

(A) In order to acquire Incheon ○○○ 520-2203 and Incheon ○○ 530-19 101 that was transferred in 2001, the Plaintiff asserted that an auction commission and a surrendering expense should be paid to ○○ Real Estate Brokerage Company totaling KRW 7,000,000 to KRW 4,000,000, and KRW 3,000,000 related to ○○○○○○○○, which were transferred in 2001, and that such an amount should be deducted as necessary expenses. The Plaintiff submitted a receipt (Article 2-1, 2 of the A).

(B) However, according to the above facts, at the time of filing a transfer income tax return, the Plaintiff reported that the real estate located at ○○○○ was acquired at KRW 18,165,00,000 and paid KRW 1,053,570 with the necessary expenses. The real estate located at ○○○○○ was acquired at KRW 20,503,00 and transferred KRW 20,269,000 with the necessary expenses, and paid KRW 1,189,187 with the necessary expenses. In light of the fact that the auction fees and surrender expenses, such as the above receipt, are excessive in light of each acquisition value of the above real estate, and were not reported as necessary expenses at the time of filing a transfer income tax return, the Plaintiff did not accept this part of the Plaintiff’s assertion, as there is no evidence to acknowledge that the above expenses were actually incurred without reliance on each of subparagraphs 2-1 and 2 of the evidence submitted by the Plaintiff.

(3) Claim on the acquisition value of ○○○ site

(A) Examining the purport of the entire pleadings as to the evidence No. 19, No. 19, No. 1-4, and No. 3-1 of the evidence No. 3, the Defendant deemed that the Plaintiff acquired ○○ site by donation, and that the acquisition value thereof was the standard market price (individually announced land price) at the time of donation ( June 28, 2001), and that the Plaintiff rendered the instant disposition based on the premise that the acquisition value was KRW 31,063,200, which was the amount that the Plaintiff reported at the time of filing a gift tax return.

(B) According to Article 21(1)1 of the Framework Act on National Taxes and Article 19(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18173, Dec. 30, 2006; Presidential Decree No. 2035, Dec. 30, 2003; Presidential Decree No. 2010, Jan. 1, 2006; Presidential Decree No. 2010, Jan. 1, 2006; Presidential Decree No. 2010, Jan. 1, 2006; Presidential Decree No. 2010, Jan. 30, 2006; Presidential Decree No. 2010, Jan. 1, 2006; Presidential Decree No. 2010, Jan. 1, 2006; Presidential Decree No. 2010, Jan. 1, 201).

(C) However, as seen above, the above ○○ site was acquired by an exchange of ○○ building site and donated to the Plaintiff, and its market price is unclear, and there is no appraisal value at the time the Plaintiff acquired it. Thus, Article 61(1)1 of the former Inheritance Tax and Gift Tax Act applies to the land only to determine the value of the land according to the officially assessed individual land price under the Act on the Public Notice of Land Price and Evaluation of Land, Etc. In the case of land. Ultimately, it is lawful to assess the acquisition value of the necessary expenses to be deducted from the revenue amount of ○○ site as KRW 31,063,20, the officially assessed individual land price at the time of the acquisition of the asset (the date of donation) as the necessary expenses to be deducted from the revenue amount of ○○ site, as it is lawful

(4) Claim on additional tax in bad faith

(A) In order to facilitate the exercise of the right to impose taxes and the realization of tax claims, additional taxes under tax-related Acts are administrative sanctions imposed, as prescribed by the Act, in cases where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and in principle, the taxpayer’s intent or negligence is not considered, but do not constitute justifiable grounds that do not constitute a breach of duty (see, e.g., Supreme Court Decision 2005Du10545, Apr. 26, 2007).

(B) Therefore, the penalty tax imposed on the Plaintiff in the instant case, as seen above, is imposed in cases where the taxpayer fails to pay national taxes within the due date for payment under the tax-related Acts or the paid tax amount falls short of the payable tax amount. The substance is an amount corresponding to the statutory due date for payment and the fixed interest rate for the period between the date for payment and the due date. Even if the Plaintiff mispers that the Plaintiff’s act of transferring real estate was merely subject to the imposition of transfer income tax and that it does not constitute real estate sales business, such circumstance alone does not constitute a justifiable reason for not imposing penalty tax in light of the purport of the aforementioned law and the equity with the taxpayers who

(C) There is no evidence to deem otherwise that there is a justifiable reason to believe that the Plaintiff is not guilty of the breach of duty to pay. The Plaintiff’s assertion on this part is not acceptable as there is no justifiable reason.

3. Conclusion

Therefore, the plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.

Details of transactions (units: Won)

Transfer

Year

Types

Location of Real Estate

acquisition

Classification

Date of acquisition

Transfer Date

Details of confirmation of transactions

Details of decision of correction

Acquisition Value

Transfer Value

Necessary expenses

Total revenue amount

Total necessary expenses

Amount of income;

200

Multi-household

Incheon ○○ 706-1 104

Auction

199.04.27

200.04.27

12,300,000

28,000,000

615,000

74,100,330

48,657,442

25,442,888

Multi-household

Incheon ○ ○ 126-6

Auction

199.03.25

200.05.25

13,685,990

19,469,330

656,262

Multi-household

Incheon ○ ○ 136-8

Auction

200.07.18

200.08.31

9,472,000

10,971,000

568,190

Multi-household

Incheon ○○ 511-29

Auction

200.07.18

December 18, 200

11,360,000

15,660,000

408,960

Sub-committees

46,817,990

74,100,330

2,248,412

201

Commercial buildings

Jung-gu ○○○

840 306

Sales

oly 200.106

201.028

29,023,000

28,000,000

1,680,000

78,269,00

71,613,757

6,655,243

Multi-household

Incheon ○○○

520-2 203

Auction

200.07.11

201.04.02

18,165,000

30,000,000

1,053,570

Multi-household

Incheon ○○○

530-19 101

Auction

200.022

201.06.27

20,503,000

20,269,000

1,189,187

Sub-committees

67,691,000

78,269,00

3,922,757

202

Commercial buildings

Seoul ○○

459 117

Sales

201.09.28

202.01.08

47,000,000

50,000,000

1,160,000

66,265,000

63,135,800

2,129,200

Forest land

Gangwon ○○○○

Sales

201.04.18

202.011

5,000,000

5,000,000

290,000

Multi-household

Incheon ○○○

○○○-Ba

Auction

200.01.03

November 27, 2002

10,100,000

1,265,000

585,800

Sub-committees

62,100,000

66,265,000

2,035,800

2003

Site

Seoul ○○

338-50

Donations

201.06.28

203.01.15

31,063,200

298,000,000

36,631,896

437,297,00

196,686,198

240,610,802

Apartment house

Seoul ○○

Apartment 12-503

Sales

203.02.11

203.05.20

105,000,000

14,900,000

4,431,500

Apartment house

Seoul ○○

Apartment (excluding apartment)

Sales

November 04, 200

203.05.28

-

-

-

Site

Gyeonggi ○○○

560

Sales

203.02.13

203.08.26

11,463,00

14,000,000

624,000

50

Gyeonggi ○○○

560-1

Sales

203.02.13

203.08.26

50

Gangwon ○○○○

104

Sales

203.02.11

203.07.19

2,813,000

3,397,000

58,633

Site

Gangwon ○○○○

104-1

Sales

201.05.09

203.07.19

Forest land

Gangwon ○○○○

369

Sales

202.09.11

November 12, 2003

2,029,000

7,000,000

2,046,969

Forest land

Gangwon ○○○○

380

Sales

202.09.11

November 12, 2003

Sub-committees

152,368,200

437,297,00

44,317,998

204

Forest land

Gangwon ○○○○

208

Sales

202.09.25

204.07.03

1,000,000

1,000,000

-

1,000,000

1,000,000

-

Forest land

Gangwon ○○○○

368

Sales

202.09.25

204.06.30

Sub-committees

1,000,000

1,000,000