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

A. The Plaintiff, a school juristic person located in Seoul BB-GuCC 31 from March 1, 2005 to February 28, 2006 (hereinafter “2005 business year”), transferred KRW 26,581,575,134, which belongs to the profit-making business accounting, to the profit-making business accounting among the corporate accounting for the business year from February 28, 2006 (hereinafter “2005 business year”), and there was no balance of the reserve funds for proper purpose business to offset the amount on the equal amount as no longer the reserve funds for proper purpose business in the immediately preceding business year, so the Plaintiff reported corporate tax for the business year by deeming the entire transferred amount to be paid from the reserve funds for proper

B. As a result of conducting a tax investigation on the Plaintiff from March 4, 2008 to March 17, 2008, the Defendant determined that KRW 20,671,550,290, out of KRW 26,581,575,134, which the Plaintiff reported that it transferred to the accounts for non-profit business, was used for the purpose of acquisition of assets for profit-making business, not for the proper purpose business.

C. Accordingly, on September 1, 2008, the Defendant adjusted the amount of KRW 11,025,339,738 used as the fund for the acquisition of assets for profit-making business in the business year of 2005, and KRW 9,646,210,552 in excess of the limit for the reserve fund for proper purpose business, and KRW 1,233,376,624 in return for the return of the profits from the disposal of fixed assets. Meanwhile, the Defendant adjusted the amount of KRW 10,349,28,280,00 in return for the inclusion of the amount of KRW 10,349,28,259,140 (including additional taxes) to the Plaintiff for the business year of 205, and notified each of them of the correction (hereinafter referred to as the “disposition of this case”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 23, 2008, but was dismissed on August 25, 2010.

[Reasons for Recognition] Evidence Nos. 1 through 3, Evidence Nos. 3-1 through 9, Evidence Nos. 10 and 11, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff’s transfer of assets belonging to the corporate foundation’s profit-making business accounts to the non-profit business accounts in 2005 shall be included in deductible expenses within the limit of reserves for proper purpose business, and there is no legal ground to exclude the Plaintiff from deductible expenses on the ground that the Plaintiff used real estate for profit-making business last within the limit of reserves for proper purpose business. Thus, the Defendant’s disposition of this case imposing corporate tax by adjusting the amount included in deductible expenses that the Plaintiff included 11,025,339,738

B. Defendant’s assertion

If the plaintiff actually uses most of the money for profit-making business after transferring the money belonging to the profit-making business accounting to the non-profit business accounting, the initial inclusion in deductible expenses is only nominal, and it is not consistent with the substance and therefore should be denied.

(c) Related statutes;

It is as shown in the attached Form.

(d) Facts of recognition;

(1) The plaintiff acquired DE1 from D. EE1 to 23 8,624 m2.4 m2 (hereinafter referred to as "original assets") in Suwon-si owned by the plaintiff and operated a real estate rental business, and on August 29, 2005, the plaintiff was permitted to dispose of the original basic property for profit, which is a basic property for profit, by making the "23.8 billion won" as disposal money use; and (2) on November 2005, the plaintiff sold the original asset to FF Construction Co., Ltd. with purchase price of KRW 26,035,196,382 (the sales contract date or transfer registration was completed on August 21, 2003) and managed the above money in the account for profit-making business.

3) On January 25, 2006, the Plaintiff reported the closure of business to the competent authority as the Plaintiff had no longer engaged in the original asset leasing business.

4) On February 28, 2006, the Plaintiff reported corporate tax by including KRW 26,581,575,134, which is included in the profit business accounting at the time of settlement of accounts for the business year of 2005, in the non-profit business accounting and loss.

5) However, the Plaintiff’s board of directors decided to acquire profit-making assets for the purpose of resumption of profit-making business (real estate leasing business) on December 18, 2006. On December 22, 2006, the Plaintiff purchased from thisGG the sales volume of 797-21 and 933.6 square meters for a sales volume of 17,50,000,000 square meters for a sales volume of 797-21 and 933.6 square meters for the purpose of construction of a building for profit-making on the said land (hereinafter “alternative assets”), and entered into a contract with KK Construction Co., Ltd. on March 30, 2007 with the content that the construction cost shall be KRW 8,547,00,000 for the purpose of construction of a building for profit-making (hereinafter “alternative assets”).

[Reasons for Recognition] Gap evidence Nos. 4, Eul evidence Nos. 1, 5 through 9, and the purport of the whole pleadings

E. Determination

1) Whether the amount transferred to the accounts of non-profit business can be included in deductible expenses

Article 29 (1) of the Corporate Tax Act (amended by Act No. 8141 of Dec. 30, 2006) provides that where a non-profit domestic corporation appropriates its own business reserve funds for the proper purpose business of the corporation for the fiscal year in which income accrues, such reserve funds shall be included in the calculation of losses. Article 29 (2) of the Corporate Tax Act provides that where a non-profit domestic corporation appropriates its own business reserve funds for the proper purpose business of the fiscal year in which losses are appropriated for the proper purpose business of the fiscal year, such funds shall be offset first by the proper purpose business reserve funds for the fiscal year in which the funds are appropriated for the proper purpose business of the fiscal year. In this case, where any funds are disbursed for the proper purpose business of the concerned fiscal year in excess of the balance of the funds for the proper purpose business expenses as of the end of the immediately preceding fiscal year, the provisions of paragraph (1) shall apply by deeming such funds to have been disbursed from the proper purpose business reserve funds for the corresponding fiscal year, and Article 76 (4) of the Enforcement Rule of the Corporate Tax Restriction Act (amended by Act No. 8146 of December 30, 1) of the concerned.

In this case, the plaintiff's profit-making business operation was closed and transferred 26,581,575,134 won, which belongs to the profit-making business account at the time of the settlement of accounts for the business year 2005, to the profit-making business account. The fact that there was no profit-making business reserve fund for the purpose of offsetting on the equal amount of the transferred amount due to the lack of the proper purpose business reserve for the immediately preceding business year. As seen above, since the plaintiff transferred the assets belonging to the profit-making business account to the non-profit business account, it can be deemed that it was disbursed to the proper purpose business at the time of the transfer, even if it was not actually disbursed for the proper purpose business, and therefore there was no profit-making reserve fund for the proper purpose business at the time of the transfer. Thus, it is justifiable

2) Whether transferring to the accounts of a nonprofit business to the accounts of a nonprofit business is merely nominal transfer.

Article 76 (4) of the Enforcement Rule of the Corporate Tax Act provides that where an educational foundation transfers assets belonging to the accounts for profit-making business to the accounts for profit-making business, such assets shall be deemed to have been paid to the non-profit business. The purport of the provision is that even if the assets are transferred under the premise that they should be used for the proper purpose business, it shall be the same as paid to the proper purpose business at the time of the transfer.

In this case, according to the above facts, the plaintiff discontinued the business with the intention of not running any business leasing the original assets which had been operated until now, and transferred the money including the purchase price of the original assets from the profit-making business account to the non-profit business account, and thereafter there is no way to use the money for profit-making business before acquiring the substitute assets. Thus, the fact that the plaintiff acquired the substitute assets for profit-making business after including the amount of loss, it cannot be deemed that the transfer of the assets for profit-making business to the non-profit business account was merely merely the first nominal name

Therefore, the disposition of this case included in the calculation of earnings in the calculation of earnings for the pertinent business year after the plaintiff's act of transferring money belonging to the profit-making business to the non-profit business account is deemed unlawful on the premise that it merely does not meet the requirements for inclusion in the calculation of losses (However, the above amount shall be returned to the gross income in the business year to which the date of the above return belongs if it is revealed that a school juristic person will not actually spend or divert for profit-making business before five years elapse from the date of the inclusion in the calculation of losses in the calculation of losses, and even in such case, Article 29 (3) of the Corporate Tax Act provides that the balance of the special purpose business reserve included in the calculation of losses should be included in the calculation of earnings for the business year to which the date of the above return belongs, and the tax imposition disposition should be calculated based on the business year to which the date of the occurrence of the grounds for the return belongs, comprehensively taking into account the fact that the amount should be calculated based on the business year to which the grounds for the return occurred.

3) Scope of revocation of corporate tax for the business year 2005

The reasonable amount of tax calculated by deducting KRW 11,025,339,738, which the Defendant deemed to have used the money for the acquisition of assets for profit-making business among the amount included in gross income in the business year 2005, shall be the same as the corporate tax calculation statement stated in the attached Form. According to this, the corporate tax amount of the Plaintiff for the business year 2005 shall be the negative amount, and the disposition

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.