Examination-2016-008 (No. 14, 2016)

Whether expenses incurred in expanding and remodeling real estate over several occasions after its acquisition are included in the necessary expenses.

The taxpayer is responsible to prove the necessary expenses incurred in expanding and remodeling real estate over several occasions after its acquisition.

Article 97 of the Income Tax Act

2016Gudan5066 Revocation of Disposition of Imposing capital gains tax

CHAPTER AA

AA Head of the Tax Office

December 1, 2016

on October 25, 2017

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s disposition of imposition of the capital gains tax of December 1, 2015 against the Plaintiff on December 1, 2015 is revoked.

1. Details of the disposition;

A. On March 2, 200, the Plaintiff purchased 1/2 shares of the OO-Gu OO-dong 1044-8 and building of reinforced concrete and flat slive roof (hereinafter “the instant land” and “the instant building”) and purchased the remaining 1/2 shares on November 30, 200, and sold OO00 won on November 26, 2013.

B. On December 1, 2015, the Plaintiff did not report the transfer income tax on the instant real estate; the Defendant: (a) the transfer value of the instant real estate as KRW O0 billion; and (b) the maximum acquisition value as the book value under the No. OO in accordance with the book value submitted by the Plaintiff at the time of global income tax assessment; and (c) issued a disposition of imposition of the transfer income tax OOO for the period of 2013 to the Plaintiff (hereinafter “instant disposition”).

C. On January 21, 2016, the Plaintiff appealed and filed a request for review on January 21, 2016. On April 14, 2016, the head of the OO reflected all the expenses for extension and remodeling of the building of this case in the book value under the Norm. However, since the building extended in 2005 was not reflected in the 50.7 square meters portion of the building, the acquisition value of this portion was converted into the acquisition value pursuant to Article 114(7) of the Income Tax Act and Article 176(2) and (3) of the Enforcement Decree of the same Act, and accordingly, the Defendant corrected the amount of the transfer income tax of this case by reducing or correcting the tax base and tax amount.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the Plaintiff has disbursed expenses for expanding and remodeling the instant building several times from the purchase of the instant real estate to the sale date, it shall include the said expenses in calculating the transfer income tax. However, since all relevant data related to the said expenses have been lost, it is necessary to assess the said expenses by making an appraisal.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 97 (1) 1 (b) of the former Income Tax Act provides that "The actual transaction value which is one of the necessary expenses to be deducted from the transfer value when calculating gains shall be calculated based on the "actual transaction value required for acquisition" as provided for in the Presidential Decree. In addition, Article 163 (12) of the former Enforcement Decree of the Income Tax Act provides that "the actual transaction value as provided for in Article 97 (1) 1 (b) of the former Income Tax Act means the value as provided for in Article 176-2 (2) through (4) of the former Enforcement Decree." The main sentence of Article 176-2 (3) of the former Enforcement Decree of the Income Tax Act provides that "the actual transaction value shall be calculated by applying the following methods in order if the actual transaction value is determined or revised as at the time of acquisition, and the actual transaction value shall be determined based on the 10th day before or after the date of acquisition or the date of acquisition or the date of conversion of the assets, and it shall be deemed that the actual transaction value is within 3 months before or after the date of acquisition value.

According to the records in this case, return to the instant building, Gap evidence Nos. 2, and Eul evidence Nos. 6-1 and 2, the building of this case was the 1,874.53 square meters of the total floor area of the 1st, 3rd and rooftop at the time of the Plaintiff’s purchase of the instant building. around October 2000, the building of this case was extended to 2,415.47 square meters of the 5th and the 29.25 square meters of the 5th and the 1st and 5th and 21.78 square meters of the 1st and 5th of the 1st and 5th of the 202nd of the 1st of the 202nd of the 2nd of the 2nd of the 1st of the 1st of the 2002nd of the 2nd of the 1st of the 2nd of the 2nd of the 2005th of the 2nd of the 2nd of the 1st of the 1st of the 2nd of the 3th of the 3th of the appraisal value.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.