[1] Whether the "debt secured by a lien, pledge, or mortgage for the purpose of the pertinent inherited property" under Article 14 (2) 2 of the former Inheritance Tax and Gift Tax Act includes "debt secured by a lien, pledge, or mortgage for the purpose of the relevant inherited property", the existence and scope of which have been determined by the judgment (negative)

[2] Where the tax authority assessed inheritance tax by assessing the net profit and loss value of unlisted stocks issued by Gap and Eul, which were inherited by Eul and Eul, without including the business year in which inheritance commenced according to the formula under Article 56(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and reflecting only the net profit and loss amount of the previous three business years, the case affirming the judgment below that the method of assessing the value of stocks is lawful

[3] In a case where the “net profit and loss” is calculated for the last three years as prescribed by Article 56(3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, whether the amount of the retirement benefit appropriation under which the amount of the retirement benefit appropriation under consideration was calculated at the end of the pertinent business

[1] In light of the language and text of Article 14(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter "the Inheritance Tax and Gift Tax Act") and the legislative intent of reasonably allocating inheritance tax due to the non-resident's death by limiting liability for deducting the value of inherited property from the value of inherited property in consideration of the limitation to the inherited property in Korea pursuant to Article 1(1)2 of the Inheritance Tax and Gift Tax Act in cases of non-residents, it is reasonable to interpret that even if the existence and scope of liability of an inheritee preserved by provisional attachment on domestic inherited property has become final and conclusive by judgment, it does not constitute "liability secured by lien, pledge, or mortgage for the pertinent inherited property" under Article 14(2)2 of the Inheritance Tax and Gift Tax Act.

[2] In a case where the tax authority assessed inheritance tax by assessing the net profit and loss value of the unlisted stocks issued by Gap and Eul, which were inherited by Eul, and reflecting only the net profit and loss amount of the previous three business years, not including the business year in which inheritance commenced according to the formula under Article 56 (1) 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002), the case affirming the judgment below that the above formula is legitimate on the ground that it is reasonable to calculate the net profit and loss amount per three years, such as giving weight to the business year near the base date for appraisal; when including the business year to which the base date for appraisal belongs, it is inevitable to consider the situation of profit and loss after the base date for appraisal; thus, it cannot be deemed unreasonable to consider only the net profit and loss amount for the previous three business years, and considering the sales trends of Byung companies Byung, it cannot be evaluated by the method considering the net profit and loss amount for the business year to which the commencing date belongs.

[3] Articles 54(1) and 56(1) and (3) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 2002; hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”) provide that “net profit and loss” shall be calculated based on the amount calculated by subtracting the amount under Article 56(3)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act from the amount calculated by adding the amount under Article 56(3)2 of the Inheritance Tax and Gift Tax Act to the income for each business year under Article 14 of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010). In light of the purport of the above legislation, it is reasonable to accurately understand the stock value as of the average average amount of net profit and loss calculated by the company for the last three years prior to the base date of appraisal based on the net amount of profit and loss calculated as of the end of the pertinent business year.

[1] Articles 1(1)2 and 14(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) / [2] Articles 60 and 63(1)1(c) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002), Articles 54 and 56(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828 of Dec. 30, 202), Article 17-3(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Ordinance of the Ministry of Finance and Economy of Dec. 31, 2002), Article 54 and 56(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002); Article 17(3)4)18(1) of the former Enforcement Decree of the Inheritance Tax Act

[3] Supreme Court Decision 2005Du15311 Decided November 29, 2007

Plaintiff 1 and one other (Law Firm Rate, Attorneys Kang Sung-mo et al., Counsel for the plaintiff-appellant)

Head of Central Tax Office

Busan High Court Decision 2006Nu5618 Decided February 1, 2008

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. On the first ground for appeal

Article 14(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002; hereinafter “the Inheritance Tax and Gift Tax Act”) provides that where inheritance commences due to the death of a nonresident, a liability shall be deducted from the value of the inherited property in the event that inheritance commences due to the death of a nonresident, public charges on the relevant inherited property (Article 1), a liability secured by a lien, pledge, or mortgage for the relevant inherited property (Article 2), a liability secured by a lien, pledge, or mortgage for the purposes of the inherited property (Article 2), and a public charges and a liability for business confirmed by an account book kept

In light of the language and text of the above provision and the legislative intent of reasonably allocating the international right to taxation of inheritance tax due to the death of a nonresident by taking into account that the taxable object of inheritance tax is limited to domestic inherited property pursuant to Article 1(1)2 of the Inheritance and Gift Tax Act in the case of non-residents, the obligation deducted from the value of inherited property is also secured as domestic inherited property or has certain economic relations with domestic inherited property. In light of the legislative intent of reasonably allocating the right to taxation of inheritance tax due to the death of a non-resident, it is reasonable to interpret that the obligation of a decedent preserved by provisional attachment on domestic inherited property is not included in the " obligation secured by lien, pledge, or mortgage for the purpose of the pertinent inherited property" under Article

The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the scope of obligations deducted from the value of inherited property as otherwise alleged in the ground of

2. On the second ground for appeal

Article 60 and Article 63 (1) 1 (c) of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17828, Dec. 30, 202; hereinafter “Enforcement Decree of the Inheritance Tax and Gift Tax Act”) shall be the value assessed by the net value (the weighted average value of net profit and loss for the latest three years ± average value of net profit and loss determined by the Ordinance of the Ministry of Finance and Economy, in cases where it is difficult to calculate the market value for the latest three years ± the net value of profit and loss calculated by the net value of the relevant corporation ± (the net value of the relevant corporation ± the net asset value of the relevant corporation) calculated by the net asset value (the weighted average value of profit and loss for the latest three years ± the net value of the relevant corporation 13 years ± the net value of profit and loss before or after the date of commencement of the business 】 (the net value of profit and loss for the latest three years 】 the net value of the relevant share 】 (the net value of profit and loss before the evaluation date 】

Based on its adopted evidence, the court below acknowledged the following facts: (a) the non-party, the decedent of the plaintiffs, died on September 14, 2002, inherited shares 618,917 shares (hereinafter "the shares of this case"), which were non-listed stocks, and the defendant assessed the shares of this case according to the net value under Article 56(1)1 of the Enforcement Decree of the Inheritance Tax Act; (b) based on the net value of the shares of this case, the inheritance tax was imposed upon the shares of this case; (c) based on the formula of Article 56(1)1 of the Enforcement Decree of the Inheritance Tax Act, the method of calculating the net value of shares for the last three years, including giving weight to the business year near the base date of appraisal; (d) the business year to which the base date of appraisal belongs, has no choice but to inevitably consider the situation of profit and loss after the base date of appraisal; and (e) it is reasonable to view that the defendant's net value of the shares of the previous three business years can not be deemed unreasonable even after the base value of the appraisal date.

In light of the above provisions and relevant legal principles and records, the judgment of the court below is just, and it is not erroneous in the misapprehension of legal principles as to the appraisal of unlisted stocks, as otherwise alleged in the ground of appeal.

3. On the third ground for appeal

Article 54(1), Article 56(1), and Article 56(3) of the Enforcement Decree of the Inheritance and Gift Tax Act provide that in assessing the net value of unlisted stocks for the last three years, “net profit and loss” shall be calculated by subtracting the amount under Article 56(3)1 of the Enforcement Decree of the Inheritance and Gift Tax Act from the amount calculated by adding the amount under Article 56(3)1 of the Corporate Tax Act to the income for each business year under Article 14 of the Corporate Tax Act, the amount under Article 56(3)2 of the Enforcement Decree of the Inheritance and Gift Tax Act. In light of the fact that the legislative purport of the provision is to accurately grasp the stock value as of the base date of appraisal based on the weighted average amount of net profit and loss calculated by an enterprise for the last three years prior to the base date of appraisal, it is reasonable to deduct the retirement benefit appropriation under Article 56(3) of the Enforcement Decree of the Inheritance and Gift Tax Act from the amount calculated based on the estimate amount at the end of the relevant business year (see Supreme Court Decision 2005Du153111, Nov.

On the other hand, the court below held that in calculating "net profit and loss" for the last three years, the defendant's calculation of "net profit and loss" under Article 56 (3) of the Enforcement Decree of the Inheritance and Gift Tax Act, which was the chairperson of the above company, could not be deemed unlawful, even if the defendant did not deduct all the insufficient amount of the retirement allowance appropriation for the deceased employed as the chairperson of the above company. Such judgment of the court below is erroneous in the misapprehension of legal principles as to the evaluation of unlisted stocks, which affected the conclusion of the judgment, and the ground of appeal pointing this out

4. Conclusion

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)