[1] Requirements for the disposal price of inherited property to be included in the taxable value of inherited property pursuant to Article 7-2 (1) of the former Inheritance Tax Act to be included in the "property acquired by inheritance" pursuant to Article 24 (1) of the Framework Act on National Taxes and Article 11 (1) of the Enforcement Decree of the same Act (i.e., cash inheritance), the place where the burden of proof is

[2] If the tax authority proves that there is an amount which is objectively unclear among the proceeds from the disposal of inherited property or the proceeds from the loan stipulated in Article 7-2 (1) of the former Inheritance Tax Act, whether such amount can be included in the taxable value of inherited property unless the taxpayer proves its use (affirmative)

[1] The disposal proceeds of inherited property cannot be deemed as "property acquired by inheritance" under Article 24 (1) of the Framework Act on National Taxes and Article 11 (1) of the Enforcement Decree of the same Act unless it is proved that the disposal proceeds of inherited property are included in the taxable value of inherited property pursuant to Article 7-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 1990), unless it is proved that it was inherited in cash. As such, the burden of proving that the disposal proceeds of inherited property is included in the scope of "property acquired by inheritance" as a matter of principle by inheritance, but the tax authority must prove that the disposal proceeds of inherited property is included in the scope of "property acquired by inheritance" as a matter of principle. However, for proving the above taxation requirement does not necessarily require the tax authority to prove the principal fact that the disposal proceeds of inherited property was actually inherited in cash to the heir. In other words, it is sufficient that the disposal proceeds of inherited property

[2] Article 7-2 (1) and (2) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990) provides that where the aggregate amount of the inherited property disposed of by the ancestor or the debt borne by the ancestor exceeds KRW 50,00,00 within one year prior to the commencement date of the inheritance, the burden of proof shall be applied to the heir who is not easy to be exposed to taxation data, so that the inheritance tax can not be reduced unfairly by donation or inheritance. Thus, when the tax authority proves that there is an amount which is objectively unclear among them, such amount may be included in the taxable value of inherited property unless the taxpayer proves its use.

[1] Article 24(1) of the Framework Act on National Taxes, Article 11(1) of the Enforcement Decree of the Framework Act on National Taxes, Article 7-2(1) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; see current Article 15(1)1 of the Inheritance Tax and Gift Tax Act) / [2] Article 7-2(1) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; see current Article 15(1)1 of the Inheritance Tax and Gift Tax Act) and Article 7-2(2) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 199)

[1] Supreme Court Decision 92Nu1230 delivered on November 8, 1991 (Gong1992, 143), Supreme Court Decision 92Nu1230 delivered on October 23, 1992 (Gong1992, 3319), Supreme Court Decision 97Nu2764 delivered on September 9, 197 (Gong1997Ha, 3177) / [2] Supreme Court Decision 89Nu1490 delivered on December 12, 198 (Gong190, 282), Supreme Court Decision 92Nu413 delivered on September 25, 1992 (Gong192, 3037), Supreme Court Decision 99Nu29395 delivered on May 12, 1995 (Gong29495 delivered on September 29, 195)

Plaintiff 1 and three others (Attorneys Kim Dong-dong, Counsel for the plaintiff-appellant)

Director of the tax office

Seoul High Court Decision 96Gu37857 delivered on December 24, 1997

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

1. As to ground of appeal No. 1 regarding capital gains tax

The provisions of Article 7-2 (1) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; hereinafter the same shall apply) shall be deemed to have inherited property in cash to an heir or donated it within two years before the commencing date of the inheritance and thus, in order to prevent this, the proceeds from the disposal of the inherited property is highly likely to unreasonably reduce inheritance taxes, and thus, the heir recognizes the objective purpose of the disposal of the inherited property to be inherited in cash and included in the taxable value of inherited property under certain conditions. The amount included in the taxable value of inherited property pursuant to the above provision shall not be deemed to be the "property acquired by inheritance" under Article 24 (1) of the Framework Act on National Taxes and Article 11 (1) of the Enforcement Decree of the same Act unless it is proved that the disposal of inherited property was actually inherited and included in the scope of "property acquired by inheritance" under the above provision. However, the burden of proving that the disposal of inherited property was included in the scope of "property acquired by inheritance" under the above shall be presumed to be 197. 197.

Therefore, in cases where an ancestor disposes of inherited property within one year from the commencement date of inheritance, if it is found that the proceeds from the disposal are presumed to have been inherited in cash to the heir in light of the empirical rule, the imposition of the capital gains tax on the heir cannot be deemed unlawful unless the heir proves that the heir is not particularly subject to the application of the empirical rule.

In this case, the court below acknowledged the facts as stated in its reasoning concerning the process and purpose of acquiring the real estate of this case by Nonparty 1, the decedent of this case, and disposing of it at the time within one year from the commencement date of the inheritance, the health and property status of Nonparty 1 at the time of the disposal, the value of the real estate, and the use of the disposal proceeds, etc.

2. As to ground of appeal No. 2 regarding capital gains tax

The argument in the grounds of appeal is that, in calculating the tax base of the transfer income tax of this case, the non-party 1 is an old age and there was no other income except for the transfer income of this case. Thus, the basic deduction amount of KRW 480,00 shall be deducted from the transfer income of this case pursuant to Articles 63(1), 63(2) and (3), 68(1)1, (2), (3), and 69(1) of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994; hereinafter the same shall apply). However, the record is based on the new fact that the non-party 1 asserted in the court of final appeal cannot be deemed as a matter of ex officio examination, and it cannot be a legitimate ground of appeal.

3. As to ground of appeal No. 1 relating to inheritance tax

Article 7-2 (1) and (2) of the former Inheritance Tax Act provides that where the aggregate amount of money or debt borne by an ancestor by kind of the inherited property disposed of within one year before the commencing date of the inheritance exceeds 50,000,000 won, the burden of proof shall be de facto converted so as not to reduce the inheritance tax by donation or inheritance to an heir with cash where the disclosure of taxation data is not easy, and thus, if the tax authority proves that the use of the property is objectively unclear, the amount may be included in the taxable value of inherited property unless the taxpayer proves that the use thereof is objectively unclear (see, e.g., Supreme Court Decisions 89Nu1490, Dec. 12, 1989; 92Nu413, Sept. 25, 1992; 94Nu15929, May 12, 199; 9Nu13979, Jun. 13, 195; 97Nu19739, Jun. 13, 19797).

The court below's rejection of the plaintiffs' assertion that the plaintiffs recognized the taxable value of the inheritance of this case as 329,483,452 won, and 206,370,305 won deposited in the non-party 2's account and used by non-party 2 was justifiable in light of records and relevant evidence, and there is no violation of law such as incomplete hearing, violation of the rules of evidence, or misapprehension of legal principles

4. As to ground of appeal No. 2 regarding inheritance tax

Article 11(1)1 of the former Inheritance Tax Act provides that the amount of 40,000,000 won shall be deducted from the taxable value of inherited property in cases where a spouse has a spouse for an inheritee. The term “spouse” refers to a spouse under the law, and the de facto spouse in a de facto marital relationship does not constitute this (see Supreme Court Decision 90Nu6897, Apr. 26, 1991). Thus, the judgment below to the same purport is just and the objection against the judgment of the court below is not accepted.

Therefore, all appeals are dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Jong-sik (Presiding Justice)