Cho-2015-Divisions-622 (Law No. 15, 2015)

Gift tax and transfer income tax vary between the requirements, timing and taxpayers for the establishment of tax liability.

Unless there is a special provision excluding the overlapping application of the capital gains tax and the gift tax provisions, even if gift tax was imposed on the sales price unpaid under the former Inheritance Tax Act, the capital gains tax may be levied on the deceased who has transferred property at a low price to a related party under Article 101(1) of the Income Tax Act and Article 167 of the former Enforcement Decree of the Income Tax

Article 101 of the Income Tax Act; Calculation of Wrongful calculation of transfer income under Article 167 of the former Enforcement Decree of the Income Tax Act; and

2015Guhap5911 Revocation of Disposition of Imposing capital gains tax

CHAPTER 00

000 director of the tax office

October 27, 2016

February 9, 2017

1. The plaintiff's claim is dismissed.

2. The part concerning the participation in the litigation costs shall be borne by the Intervenor, and the remainder shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of correction and notification of capital gains tax of KRW 000,000 for the transfer income tax of KRW 000,000 for the Plaintiff on August 8, 2014 shall be revoked.

1. Details of the disposition;

A. The Plaintiff is the deceased’s wife, and ParkBB is the children of the deceased’s spouse of the deceased (the deceased’s death on February 22, 2012, hereinafter referred to as “the deceased”). The deceased and ParkB is the first degree of matrimonial relationship under Article 98(1)1 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 23588, Feb. 2, 2012; hereinafter referred to as “former Enforcement Decree of the Income Tax Act”). In addition, the Plaintiff’s Intervenor’s ○○ Tax Accounting Corporation (hereinafter referred to as “the Intervenor”) is a corporation engaging in the business of filing a tax return, filing a request, filing a claim, etc. on behalf of the deceased, and the Plaintiff’s Intervenor’s Intervenor KimD (hereinafter referred to as “Defendant KimD”) is a certified tax accountant.

B. On September 29, 201, the Deceased made an agreement with the following contents (hereinafter referred to as the “instant agreement”) to sell all of the property inherited to the Net ParkCC (hereinafter referred to as “instant property”) (hereinafter referred to as “the instant transaction”).

Agreements

1. The Deceased shall sell all inherited property inherited to the Net ParkCC to ParkB.

2. The calculation of the total purchase price shall be one-half of the total amount appraised as two certified public appraisers and assessed as one-half of the amount assessed.

3. The payment of the price shall be made by paying 00,000,000 won each month for the balance of the appraised amount when compensation for the second general industrial complex is received at 00,000 square meters located at 00 interest of ParkB, and shall be made by paying 00,000,000 won each month for the balance of the appraised amount.

4. To delegate all rights to the entire inherited property of the deceased to ParkB after the preparation of a written agreement until the registration of ownership transfer.

C. According to the instant agreement, the sales price calculated by the average of the appraisal results of two appraisers on the instant property, and the content of the instant property are as follows.

(Omission of List)

D. ParkB assumed debt 0,00,457,740 won for the instant property, and paid the deceased KRW 0,000,000 in cash, and on December 30, 2011, ParkB repaid to the Deceased KRW 0,000,000 for the instant property in lieu of partial payment (hereinafter “the instant purchase price”) out of KRW 0,000 for the instant property and KRW 00,000 for 00,000 for 00,000 for 0000 for 00,0000 for 00,000 for 00,000 for the instant apartment (hereinafter “the instant apartment”).

E. As the Deceased died on February 22, 2012, ParkB reported gift tax on March 31, 2012 by deeming the unpaid balance 0,000,000,000,000 out of the purchase price of the instant case as a donation of profits from a low-price transfer, but on the premise that the obligation to pay the unpaid balance calculated on May 30, 2012 within the scope of KRW 0,000,000,000 per month until the time of the Deceased’s death, under the premise that the obligation to pay KRW 00,00,000 per month was extinguished by the time of the Deceased’s death, a revised gift tax was deemed as a simple donation, not a donation of profits from a low-price transfer.

F. On June 30, 2012, the Intervenor KimD submitted to the Defendant a report on the tax base of the deceased’s transfer income and the dispatch of the deceased’s transfer income, and the sum of the transfer value of the real estate except apartment among the instant property.

Transfer value of KRW 000,000,000 and non-listed shares, and KRW 00,000,000 and KRW 00,000.

Of 00 apartment No. 000, 000, the transfer value of 3/7 shares among 000,000,000 won was reported as the tax base of capital gains tax (hereinafter “tax base return of this case”).

(g) Transfer income from the sales of this case at the comprehensive audit by the head of △△ Tax Office;

On August 8, 2014, the defendant pointed out that the sale of this case by the deceased and ParkB to the plaintiff constitutes a wrongful calculation under Article 101 of the Income Tax Act. The defendant issued a disposition to correct and notify the plaintiff (hereinafter referred to as the "disposition of this case") of the transfer income tax of 00,000,000 won (=additional tax of 00,000,000 won for general underreporting + penalty tax of 00,000 + penalty tax of u u 3000,000 in good faith payment + penalty tax of u u u u300,000) for the year 201.

H. The Plaintiff, who was dissatisfied with the instant disposition, filed an objection on October 2, 2014, and filed an appeal with the Tax Tribunal on December 16, 2014. However, the Tax Tribunal dismissed the appeal on April 15, 2015.

[Reasons for Recognition] The facts without dispute, Gap's statements in Gap's Evidence Nos. 1 through 9, Gap's Evidence Nos. 2 through 4, Eul's Evidence Nos. 1 through 7 (including various numbers), the inquiry results on the intervenor's legal entity, the witness intervenor's testimony, the witness KimD's testimony, the witness E's partial testimony, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(i)taxation and payment by a person who is not a taxpayer;

The tax base return of this case, which was the basis of the disposition of this case, was prepared and submitted after the deceased, who is the person liable to report and make the payment, died, and is not prepared and submitted by the intervenor KimD entrusted by ParkB or ParkB, and cannot be deemed to be a legitimate return after the due date. Therefore, the disposition of this case, based on the illegal tax base return of this case, by the defendant, on the ground that the sale of this case constitutes a wrongful calculation of capital gains as stipulated in Article 101 of the Income Tax Act, should be invalidated or revoked because the defect is serious and clear.

(ii) procedural illegality of a subsequent declaration;

The instant tax base return is a return after the deadline stipulated in Article 45-3 of the former Framework Act on National Taxes (amended by Act No. 12848, Dec. 23, 2014); thus, the Defendant is deemed to have determined the tax base and amount of capital gains tax within three months from the date of the report pursuant to Article 45-3 (3) of the same Act, and where it is impossible to make a decision within three months from the date of the report due to extenuating circumstances, such as requiring a long period of time to investigate the tax base and amount of tax when investigating the tax base and amount of tax, etc., the Defendant did not undergo the instant procedure even before the date of the report. Accordingly, the instant disposition

3) Violation of the principle of substantial taxation

Since ParkB actually controls and manages the substantial economic power over the unpaid balance of the purchase price of this case, the instant disposition against the Plaintiff, which is merely the inheritor of the deceased’s duty to pay capital gains tax, is a disposition that violates the principle of substantial taxation, and thus should be revoked accordingly.

4) Illegality of applying wrongful calculation of capital gains

In order to apply Article 101 of the Income Tax Act, it is recognized that the tax burden on capital gains has been unjustly reduced due to transactions with a specially related person. However, inasmuch as capital gains tax is reported and paid on the actual purchase price, and ParkB reported and paid gift tax on the unpaid purchase price, it is deemed that the actual tax liability was fulfilled. Therefore, the instant sales cannot be deemed as an unfair reduction in tax burden, and the instant disposition on a different premise should be revoked.

B. Relevant statutes

Attached Form 3 is as listed in the "relevant Acts and subordinate statutes".

C. Facts of recognition

1) On May 20, 1937, the Deceased’s age is 74 years of age at the time of the preparation of the instant agreement, and the standard life expectancy of a woman announced by the Statistics Korea is 84.45 years of age, and if it is assumed that the Deceased is alive until the standard life expectancy of the deceased, ParkB’s amount to be paid until the time of his death is about KRW 0,000,000 (i.e., KRW 00,000 x 12 months x 10 years). The above amount is similar to KRW 0,00,000,000,000, which is similar to the remainder of the purchase price of the instant case.

2) On August 23, 2012, the Plaintiff reported the inheritance tax to the Defendant upon the death of the Deceased, and reported the taxable amount of inheritance tax to KRW 0,000,000,00 in total details of inherited property, and the amount of deemed donation (transfer at low price) at KRW 0,00,000,000, respectively.

3) The Plaintiff filed a lawsuit against ParkB-B and the Intervenor seeking the unpaid balance of the instant purchase price and compensation for damages arising from the instant disposition, with the △△ District Court 000Kahap0000, and the said court rendered a judgment against the Plaintiff on October 6, 2016, and the said judgment became final and conclusive around that time.

[Reasons for Recognition] Facts without dispute, the evidence as seen earlier, Gap's evidence Nos. 10, 11, Gap's evidence Nos. 1 and 5, and the purport of the whole pleadings

D. Determination

1) Determination on the duty return and allegation of payment by a person who is not a taxpayer

The above-mentioned facts and the whole purport of the evidence duly admitted are as follows.

In other words, the Plaintiff was well aware that 00,000,000 won was donated to B before the death of her, and that she was paid to her so far as she did not know that she had any authority over the sale and purchase of this case. As such, she appears to have been well aware of the fact that she was delegated to her b to her stuff, the Plaintiff delegated her inheritance tax return due to the death of her son, paid 0,000,000 won to her her son for fee. On August 23, 2012, she did not report her her her son’s her obb’s obb’s obb’s ob’s ob’s ob’s ob’s ob’s ob’s ob’s o’s o’s ob’s o’s o’s ob’s o’s o’s o’s son’s o’s o’s o’s ob’s o’.

2) Determination as to the assertion of procedural illegality regarding a report after the deadline

In full view of the above facts, Eul evidence No. 2 and the purport of the argument, although the defendant decided the tax base and amount of capital gains tax on December 31, 2012 (hereinafter referred to as "previous decision"), which was three months after the date of the tax base return of this case, on June 30, 2012, which was the date of the tax base return of this case, the defendant did not notify the plaintiff of the reason for delay, but the previous decision cannot be deemed unlawful merely with the defect in the above notification procedure. Furthermore, even if the previous decision was unlawful, Article 114 (2) of the Income Tax Act provides that "if the head of a tax office or the director of a regional tax office having jurisdiction over the place of tax payment makes a preliminary return under Article 105 of the Income Tax Act or a person who made a final return under Article 110 has any omission or error in the details of the return, he shall correct the tax base and amount of capital gains tax at any time and the amount of tax within the exclusion period of taxation. Therefore, the defect in the above notification procedure cannot be seen in this part of the plaintiff.

3) Determination as to the assertion of violation of the principle of substantial taxation

Article 101 (1) of the Income Tax Act provides that a taxation office shall take action or limit to a resident who has any capital gains.

Article 167(3) and Article 98(1)1 of the former Enforcement Decree of the Income Tax Act provides that "if it is deemed that the tax burden on the relevant income has been reduced unreasonably due to transactions with a person with a special relationship with the resident, such income may be calculated regardless of the resident's act or calculation," and Article 167(3) and Article 98(1)1 of the former Enforcement Decree of the Income Tax Act provides that "if the income can be calculated as above, it refers to a case where

In light of the language and text of the above provisions and the system of denial of unfair calculation to prevent the avoidance of taxes and realize the equitable burden, etc., even if profits from the sale and purchase of this case accrue to ParkB, the defendant can impose capital gains tax on the balance unpaid pursuant to Article 101 of the Income Tax Act, so the disposition of this case cannot be deemed to violate the principle of substantial taxation. Accordingly, the plaintiff's assertion on this part is without merit.

4) Illegality of applying wrongful calculation of capital gains

A) The provisions of Article 101(1) of the Income Tax Act and Articles 167(3) and 98(1)1 of the former Enforcement Decree of the Income Tax Act are as seen earlier, and Article 35(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 13557, Dec. 15, 2015; hereinafter “former Inheritance Tax Act”) provides that “where the property is acquired from another person at a price lower than the market price, the transferee of the property shall be deemed as the value of donated property equivalent to the difference between the price and the market price at the time of acquisition of the property.”

However, gift tax and capital gains tax vary between the requirements, timing, and taxpayers for the establishment of tax liability. In imposing each tax, the tax authority should make an independent determination in accordance with the substance of each taxation requirement. If all the requirements of the above provisions are satisfied, only one taxation can be made unless there is any special provision excluding overlapping application (see Supreme Court Decision 2002Du12458, May 13, 2003).

B) Unless there is a special provision excluding the overlapping application of the above capital gains tax and the gift tax provisions on the instant case, even if the Defendant imposed gift tax on the unpaid purchase price on ParkB pursuant to the former Inheritance Tax Act, it can again be deemed that the transfer income tax may be levied on the deceased who transferred the instant property at a low price to ParkB pursuant to Article 101(1) of the Income Tax Act and Article 167 of the former Enforcement Decree of the Income Tax Act, since the Plaintiff’s assertion on this part is without merit.

3. Conclusion

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

(c)