2. All the costs of lawsuit are assessed against the Plaintiffs.

A. The Daeyang C&C Co., Ltd. (hereinafter referred to as the “Mayang C&C”) was established on February 6, 1986 with its capital of KRW 100 million (10,000 per share of the total number of stocks to be issued). The capital was increased to KRW 500,000 prior to May 4, 1996, and 50,000 of the issued shares was owned by both the Plaintiff and the Plaintiff.

(b) Details on the increase of capital of Yangyang C&C;

(1) On May 4, 1996, Yangyang issued new shares of KRW 50,00 (the par value of KRW 10,000 per share) and increased its capital to KRW 1 billion, and the Plaintiff Lee Hy-han accepted only new shares of KRW 4,000, and renounced the preemptive right to the remaining 46,000 shares, and thereby, accepted the forfeited shares, such as the Plaintiff Park Young-gu et al., as indicated in the attached tax disposition statement.

(2) On May 30, 1997, Yangyang C&C issued new shares with 1.7 billion won again, and accepted only 17,000 shares of each of 34,000 shares (the face value of KRW 10,000), each of which was allocated by the Plaintiff R&C, and renounced the preemptive rights of KRW 17,000, respectively, and acquired 34,000 shares totaling the forfeited shares by the Plaintiff Lee Young-chul-do.

On the other hand, on May 15, 1997, Yangyang decided to allocate 36,00 new shares (the face value of KRW 10,000 per share) to third parties in 111,00 won per share. On May 30, 1997, the Korea Technology Finance and Comprehensive Technology Finance respectively acquired the new shares.

(3) On June 26, 1997, Yangyang C&C had 388,00 shares of 38,00 shares free of charge. Only 14,235 shares out of 46,909 shares of each of the preemptive rights allotted by the Plaintiff Young-gu and the Ko Young-gu. The total of 65,348 shares was additionally allocated to the Plaintiff Bo Young-do.

C. Details of taxation disposition

The Defendants: (a) pursuant to Article 34-5 of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1996; hereinafter the same) by giving up part of the preemptive right to new shares, the remaining Plaintiffs are deemed to have received new shares; and (b) pursuant to Article 39 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6301, Dec. 29, 2000; hereinafter the same), by allowing the Plaintiff to receive only a part of the shares as above and additionally distribute the remainder, the Defendants deemed to have received benefits equivalent to the difference between the appraised value of each new shares and the subscribed value; (c) pursuant to supplementary assessment method, with respect to the portion of the donation on May 4, 1996, the amount per share of new shares is deemed to have been evaluated as KRW 23,813; and (d) the amount of each gift tax on May 30, 1997 as indicated below against each of the Plaintiffs as KRW 93,5264,666.

(C) The value per share

(a) The value per share with respect to the capital increase on May 4, 1996;

(1) Net asset value per share

27,906 won (including 50,000 won per day capital increase) 2,790,638,353 ±10,000 shares (including 50,000 shares per day capital increase) of net assets after capital increase.

(2) The net value per share;

The net profit and loss amount for the business year 1993, 115, 569, 447, 906, 94152,302, and 10,000 10,000 10,000 10,000 10,3124, 7915,230

0. The weighted average amount of net profits and losses per share;

(94,312 x 3+44,791 x 2+5,230) ± 6 = 62,958

0. Net profit and loss value per share: 62,958 won ¡À15 percent = 419,720

(c) Value per share: (27,906 + 419,710 won) ¡À2=23,813 won;

(b) The value per share with respect to the capital increase on May 30, 1997;

(a) The value per share before the capital increase;

(A) Net asset value per share before the capital increase;

8,006 won (i.e., the value of net assets before the capital increase 8,800,654,263 ± the total number of outstanding stocks before the capital increase.

(b) the net profit and loss value per share;

The net profit and loss amount per 3,721,356,879, 943, 115, 569, 447,906, the number of net profit and loss amount per 100,000 10,000 10,000 10,000 10,000 as of the end of 941, 1995 business year 194,3124,791

0. The weighted average amount of net profits and losses per share;

(37,214 x 3+94,312 x 2+4,791) ± 6 = 57,509

0. Net profit and loss value per share: 57,509 won ¡À15 percent = 383,393 won;

(c) The appraised value per share before the capital increase: (88,06 + 383,393 Won) ¡À2 = 235,699 won;

(b) The value per stock of new stocks;

93,592 won = (235,699 won per share before capital increase x 100,000 won of the total number of outstanding stocks x 100,000 won of the value of one new stocks x 170,000 won of the number of increased stocks due to capital increase) ¡À (10,000 weeks of the number of issued stocks before capital increase ＋ 170,00 won of the number of increased stocks by capital increase).

(c) The value per share related to the increase of capital on June 26, 1997;

(a) The value per share before the capital increase;

(A) Net asset value per share before the capital increase;

19,687 won (i.e., the value of net assets before capital increase 12,048,801,266 won ± 612,00 won (the same shall apply in this calculation sheet) of the total number of issued and outstanding stocks before capital increase.

(b) the net profit and loss value per share;

The net profit and loss amount per 3,721,356,879, 943,115,569, 447,906, the number of net profit and loss amount per 200,000 20,000 20,000 20,000 20,000 per 1995 business year 1994 business year 1962,395

0. The weighted average amount of net profits and losses per share;

(18,607 won ¡¿ 3+47,156 won ¡¿ 2+2,395) ¡À6 = 28,754 won

0. Net profit and loss value per share: 28,754 won ¡À15 percent = 191,693 won;

(C) The appraised value per share before the capital increase = (19,687 won + 191,693 won) ¡À2 = 105,690 won

(b) The value per share of new stocks;

64,682 won = [The number of stocks increased by the increase 612,00 + (105,690 won per share before the increase x 612,00 won of the total number of issued and outstanding stocks x 0 won of the value of one stock x 388,000 won of the number of stocks increased by the increase in the capital] ¡À (612,000 won of the total number of issued and outstanding stocks before the increase x 388,000 shares)];

[Grounds for recognition] A without any dispute, A-1-9, A 2-1-6, B-1-3, B-1-3, B-1-3, B-1-3, B-1-4, B-1-4, B-1-5, B-1-5, B-1-5, B-1-5, 9-1-5, 10-5, B-1-5, 12-1-5, 13-1-5, 13-1-4, 14-1-6, 15-1-5, and 15-1-5, respectively.

2. Relevant statutes;

Attached Form is as shown in the attached Form.

3. Whether the disposition is lawful;

A. Whether the taxation disposition against the remaining plaintiffs, excluding the plaintiff Bobane, is legitimate

(1) The plaintiffs' assertion

Article 5(6)1 (c) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 15193, Dec. 31, 1996; hereinafter the same shall apply) provides that the method of calculating non-listed stocks shall be the arithmetic average value of each appraised value pursuant to the net asset value method and net profit and loss method concurrently in assessing non-listed stocks. Article 5(4) and (5) of the former Enforcement Rule of the Inheritance Tax Act (amended by Presidential Decree No. 629, Apr. 197; hereinafter the same shall apply) provides that the net value of each share shall be calculated by dividing the net value of the issued stocks as of the base date of appraisal in calculating the net value of the shares before and after the base date of appraisal so that it can be calculated by dividing the net value of the shares calculated by the above net value of each share as of the end date of each business year by the net value of the issued stocks before and after the base date of appraisal. The main sentence of Article 5(5) of the former Enforcement Rule of the Inheritance Tax Act provides that the net value of each share shall be calculated by dividing the net value of each share.

(2) Determination

(A) Article 5(6)1(c)(2) of the former Enforcement Decree of the Inheritance Tax Act provides that one share value of unlisted stocks shall be calculated by the average method by aggregating the net asset value and net profit and loss value, and among them, the net asset value shall be calculated by dividing the net asset value of the relevant corporation into the total number of outstanding stocks. The net asset value here refers to the amount obtained by deducting liabilities from the asset value of the relevant corporation as of the base date of appraisal (Article 5(6)1(d) of the former Enforcement Decree of the Inheritance Tax Act)

In addition, net value of profit and loss shall be calculated by dividing the weighted average of net profit and loss per share for the preceding three years by the return rate as prescribed by the Ordinance of the Prime Minister. The weighted average of net profit and loss per share for the preceding three years shall be calculated by calculating the weighted average of net profit and loss per share for the preceding three years: [the net profit and loss per share for the business year which has become one year before the commencement of the inheritance x 3] + (2) + (1) x 1/6 of the former Enforcement Rule of the Inheritance Tax Act] x (Article 5(4) of the former Enforcement Rule of the Inheritance Tax Act). This is to give weight to the most recent trend of profit and loss in calculating the net profit and loss per share in the above formula. The number of stocks for each business year shall be calculated based on the total number of stocks issued as of the end of each business year (the main sentence of Article 5(5) of the former Enforcement Rule of the Inheritance Tax Act). However, the number of stocks issued without compensation per business year before and after the commencement of each business year 5 years (the number of free share issuance without compensation).

(B) However, it is deemed that the method of seeking the value of net profit and loss in the above formula applied to the above plaintiffs in the taxation disposition of this case is unreasonable to disregard the fact that the number of stocks with 10,000 shares as of the end of May 4, 1996 was increased to 10,000 shares as of May 4, 1996. However, the net value of the stock and loss is calculated by dividing the net profit and loss by the total number of stocks issued in the pertinent business year. Thus, the number of new stocks that have not contributed at all to realizing the net profit and loss amount during the pertinent business year is not added, and even if it is calculated based on the "total number of stocks issued as of the end of the business year" as of the total number of stocks issued as of the end of the pertinent business year, it does not violate the market value principle under Articles 34-7 and 9(2) of the former Inheritance Tax Act, and there is no ground for calculating the value of net profit and loss by applying the "total stocks issued as of October 10, 20, 20.

Therefore, the instant taxation disposition by the Defendants against the above Plaintiffs, which assessed the value of new shares in accordance with each of the above statutes, is lawful.

B. Whether the taxation disposition against the Plaintiff Band B and B is legitimate

(1) The above plaintiff's assertion

(A) The period of June 26, 1997 after the increase of capital by May 30, 1997 is less than one month, and there is no special change in the company’s business performance or financial status during the above period, and thus, the appraised value per share before the increase of capital by June 26, 1997 (amended by the Presidential Decree No. 15971, Dec. 31, 1998; hereinafter the same shall apply) Articles 54 through 56 of the former Inheritance Tax and Gift Tax Act, the former Enforcement Rule of the Inheritance Tax and Gift Tax Act (amended by the Ordinance No. 79, May 7, 1999; hereinafter the same shall apply) shall be applied to 00 won per share after the increase of capital by deeming the amount to be less than 1 million won, 1 million won per share after May 30, 1997 x 95,6400 won + 1 million won per share before the increase of capital x 6060 million won per share.

(B) Even if it is not so, Article 56 (1) 1 of the former Inheritance Tax and Gift Tax Act provides that in calculating the net profit and loss value of a stock, “the net profit and loss amount for the immediately preceding three years” shall be calculated by dividing them into “the number of days as of the end of the pertinent business year”. This is premised on the same net value per share value per share after the increase in the capital, and thus, it cannot be said that the net profit and loss amount of the corporation increased as of the rate of the shares increased as of the increase in the increase in the capital, or that the increase in the net profit and loss amount cannot be said to have increased as above. Thus, the above formula is deemed to have been donated more than the actual profit and loss, and thus, the value of the property on which the gift tax is imposed shall be calculated based on the market value as of the date of donation (amended by Act No. 6301, Dec. 29, 200; hereinafter the same shall apply). Therefore, it is against the principle of appraisal of Article 60 (1).

(2) Determination

(A) On December 30, 1996, the Inheritance Tax and Gift Tax Act was amended by Act No. 5193 on December 30, 199, and the Enforcement Rule of the same Act were also amended. Article 63(1)1 (c) of the former Inheritance Tax and Gift Tax Act, which provides for the evaluation of unlisted stocks, and Article 54, 55, and 56 of the Enforcement Rule of the same Act, and Article 17 of the Enforcement Rule of the same Act are identical or similar to those of the former Inheritance Tax and Gift Tax Act before the amendment. However, Article 29(2)1 of the former Inheritance Tax and Gift Tax Act provides that the value per share after the issuance of new stocks when new stocks are cultivated from the capital increase is calculated by calculating the value per share after the issuance of new stocks (value per share before the increase x number of new stocks issued before the increase x number of stocks issued before the increase x number of stocks issued before the increase x (number of stocks increased by the increase x number of stocks issued before the increase).

(B) In relation to this, the plaintiff Lee Han-chul asserts that the evaluation value per share before the capital increase should not be calculated by the supplementary evaluation method pursuant to Articles 54 through 56 of the former Inheritance and Gift Tax Act, not by the supplementary evaluation method pursuant to Articles 54 through 56 of the former Inheritance and Gift Tax Act, but by the evaluation value per share after the capital increase on May 30, 1997.

However, the above formula only provides that "the appraised value per share before the increase in the capital," but does not provide for the specific contents of the appraisal value per share before the increase in the capital, it is reasonable to interpret the literal interpretation as a matter of course to mean the amount calculated under the provisions of Articles 54 through 56 of the Enforcement Decree of the above Act on the basis of the time immediately before the increase in the capital. In other words, the circumstance asserted by the plaintiff is short of time between the increase in the capital of May 30, 1997 and the increase in the capital of June 26, 197. The reason why there was no change in a special financial situation is that the appraisal value of new shares immediately after the increase in the capital was issued on May 30, 1997 (this is the valuation value per share before the increase in the capital of May 30, 1997). Thus, the above plaintiff's above assertion is without reason to determine the value of new shares before the increase in the capital of May 30, 1997.

In addition, in assessing the net profit and loss value of stocks, the Plaintiff asserts that the net profit and loss value at the end of the pertinent year should be divided into the total number of stocks issued as of the evaluation base date, not into the total number of stocks issued as of the end of the pertinent year, but the above Defendant’s calculation by dividing the net profit and loss value of stocks into the total number of stocks issued as of the evaluation base date is lawful as seen above. Rather, there is no basis for calculating it by dividing it into the total number of stocks issued as of the evaluation base date, and the inheritance and gift tax, which was amended by Presidential Decree No. 15193 on December 31, 1996, which was revised by Presidential Decree No. 15193 on December 31, 196, was revised to calculate the assessment value per share after the issuance of new stocks in cases where

Therefore, the taxation of this case against the above plaintiff, which was assessed by the value of new shares in accordance with the above laws and regulations, is legitimate.

4. Conclusion

Therefore, since all of the taxation disposition by the Defendants are legitimate, the plaintiffs' claims of this case seeking revocation are all dismissed as it is without merit. It is so decided as per Disposition.

[Attachment Taxation Details]

Judges Kim Chang-suk (Presiding Judge)