Cho-2019-China-068 ( October 15, 2019)

Acquisition of land by the judgment on partition of co-owned property does not constitute a commercial transfer subject to capital gains tax.

The plaintiff acquired the disputed land through the division of inherited property, and the division of co-owned property is merely changed in the form of ownership, and the time of acquisition of the controversial land shall be deemed the commencement date, not the registration date of partition.

Enforcement Decree of the Income Tax Act Article 162 (Time of Transfer or Acquisition)

2019Guhap720 revocation of rejection of a request for rectification of the tax base and amount of duty

○ ○

○ Head of tax office

2019.19

October 17, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The rejection portion made by the Defendant to the Plaintiff on January 7, 2019 shall be revoked.

1. Details of the disposition;

(a) Acquisition, etc. of land ownership by inheritance of the plaintiff;

1) The land of 65-1 woodland 43,736 square meters in 00,000, 00 ○○-dong, ○○○-dong (before the change of the name of the administrative district on March 21, 2001, hereinafter referred to as “○○-si, ○○-gun, ○○○-gun,” regardless of whether it was before or after the change of the name of the administrative district; hereinafter referred to as “○○-si, ○○-do”) is the

2) However, on November 26, 1970, this B and thisCC completed the registration of preservation of ownership as to 65-1 forest land and 43,736 square meters in 0,000,000. On May 15, 1982, the above 00-1 forest land and 65-1 forest land and 868 square meters in 0,000,000 and 65-3 forest and 21,868 square meters in 0,000,000,0000 and 65-3 forest and 21,868 square meters in 0,000,000, and completed the registration of ownership transfer as to 65-1 forest and 868 square meters in 0,000,000,0000,000,000,000,000,000,000 square meters in 20,000.

3) On January 10, 1937, Lee Dong-dong died and succeeded to its own property solely by Lee Dong-nam on May 15, 1958. Lee Dong-nam died on August 22, 1970, and on the premise that Lee Dong-dong ○○○-dong 65-1 forest land 19,772 square meters were inherited property, Lee Dong-nam, Lee Dong-nam, Lee Dong-nam, the sole inheritance of its own property. And on February 2, 2000, Lee Dong-dong ○○-dong 65-1 forest land 19,72 square meters were owned by the plaintiff.

4) On May 3, 200, the Plaintiff filed a lawsuit seeking the cancellation of ownership transfer registration under the above BB, the name of thisCC, and the ownership transfer registration under the above BB and this BB’s name on November 26, 1970, and the ownership transfer registration under the above BB was invalid on June 3, 1982. The Plaintiff asserted that the ownership transfer registration under the above B, the name of thisCC, and the ownership transfer registration under the name of this B was in accord with 1217 U.S. Sung-nam branch of Suwon District Court, the above ○○○-19,72m2, and the above 65-1, 72m2m2, and the registration of ownership transfer under the above name of this 00 B and this 65-1, 19, 72m2, and this judgment was finally rendered on July 16, 1972, this case’s ownership transfer registration under this case’s name and this case’s ownership transfer registration under the above name of this 72, this case’s name.

In accordance with the above final judgment on May 6, 2010, the registration of correction of registration of ownership preservation was completed with respect to the above ○○-dong 65-1 forest land and 18,769 square meters (the above ○○-dong 65-1 forest land and 19,772 square meters was divided into the above ○○-dong 65-1 forest and 1879 square meters on July 27, 2004 and the above ○○-dong 65-18 land and the above ○○-dong 65-18 land on July 27, 2004.

(b) Co-owned partition;

1) On February 16, 2011, the Plaintiff filed a lawsuit as to partition of co-owned property against Suwon District Court ○○○○ Branch 2010dan000, and was sentenced to a judgment on February 16, 201, which divided the above 05-1 forest land of 65-1 forest land of 0,384 square meters into the sole ownership of this BB, and the above 00-20 forest land of 65-20 forest land of 0,385 square meters into the said 00-dong, 000 square meters into the sole ownership of the Plaintiff, and the above judgment was finalized on November 2, 201 (hereinafter referred to as the “instant judgment”).

2) On November 17, 201, the Plaintiff, based on the judgment on partition of co-owned property, completed the registration of ownership transfer based on the above partition of co-owned property, as to the above ○○○-dong 65-20 forest land, 9,385 square meters in the Plaintiff’s name.

(c) Payment, etc. of real estate sales and transfer acquisition tax;

1) The above ○○○-dong 362-32 Forest land (hereinafter referred to as “instant land”) is the land partitioned into 9,385 square meters of forest land in ○○-dong 65-20 forest land and 9,385 square meters.

2) On December 29, 2014, the Plaintiff sold the instant land to ParkF for KRW 500 million, and completed the registration of ownership transfer on the instant land in the future of ParkF on February 9, 2015.

3) On April 30, 2015, the Plaintiff, after the said transfer, reported and paid KRW 99,97,800 capital gains tax to the Defendant on August 22, 1970, the date of acquisition of the instant land, which was the date of commencing the inheritance ( January 1, 1985, the date of commencing the inheritance) and the acquisition value was converted into the acquisition value ( KRW 47,472,826, the date of commencing the inheritance).

D. Plaintiff’s request for correction and Defendant’s rejection disposition

1) On November 19, 2018, the Plaintiff filed a correction claim for refund of KRW 99,97,800 of capital gains tax on the premise that the acquisition date of the instant land was not the date of commencing the inheritance, but the acquisition value was the KRW 491,847,807, Nov. 17, 201, which was the date of registration of ownership transfer in the Plaintiff’s sole name, based on the instant judgment on partition of co-owned property, based on the judgment on partition of co-owned property in this case.

2) On January 7, 2019, the Defendant rendered a disposition rejecting the Plaintiff’s request for correction by deeming the time of acquisition of the instant land as the date commencing the inheritance (hereinafter “instant refusal disposition”).

3) On January 22, 2019, the Plaintiff filed an appeal with the Tax Tribunal against the Defendant’s instant rejection disposition, but the Tax Tribunal dismissed the Plaintiff’s appeal on May 15, 2019.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Gap evidence Nos. 1 through 5 (if any, including a serial number; hereinafter the same shall apply), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff, which is the mother land of this case, acquired 65,385 square meters of the above 00 m20 m3,000 m3,000 m385 m3 by the judgment of partition of this case. Thus, the acquisition date of the land of this case, which was divided from the above, shall be November 17, 201, which is the registration date of ownership transfer in the Plaintiff’s sole name according to the judgment of partition of co-owned property of this case. However, on April 30, 2015, the Plaintiff reported and paid the transfer income tax following the transfer of the land of this case on April 30, 2015, calculated the acquisition value (converted value) by applying the acquisition date of the land of this case to the inheritance date as the inheritance date, and paid the transfer income tax of this case 9,997,800 m3,00. However, the acquisition date of the land of this case to the effect that the Plaintiff refused to pay the transfer income tax of this case as the Plaintiff’s claim for rectification.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Relevant legal principles

A) Even if one of the co-inheritors acquires the property exceeding his/her own share of inheritance as a result of an agreement on the inherited property by division among co-inheritors, the division of the inherited property is retroactively effective at the time of the commencement of inheritance, and thus, it shall be deemed that it was directly succeeded from the inheritee at the time of the commencement of inheritance (see, e.g., Supreme Court Decisions 92Da32463, Oct. 27, 1992; 2017Da265631, May 10, 2019).

B) According to Article 88 subparag. 1 of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016), “transfer income tax” means the de facto transfer of an asset through sale, exchange, investment in kind in a corporation, etc., regardless of the registration or enrollment of the asset. Capital gains tax imposed on the transfer of the asset is imposed on the income accruing from the increase in the value of the asset belonging to the owner, and the opportunity to transfer the asset to another person is imposed on the income. In order to impose capital gains tax, there must be a transfer of the asset. The division of the original common property is legally deemed the exchange or sale of shares between the co-owners. However, in substance, the right, i.e., the right acquired by the division of common property, which is limited to the specific part acquired by the division, and its form is changed. Thus, it does not constitute a co-owned share transfer of 201 after the acquisition of the first co-owned share (see, e.g., Supreme Court Decision 2001Du394).

2) Specific determination

In this case, as one of the co-inheritorss of the network EE, the Plaintiff inherited 1/2 shares out of 19,772 square meters of the above ○○○-dong 65-1 Forest land and 19,772 square meters prior to the division through an agreement with other co-inheritors. The division of inherited property through consultation takes effect retroactively at the time of commencement of inheritance, and even according to Article 98 of the former Income Tax Act and Article 162(1)5 of the Enforcement Decree of the same Act, as regards the assets acquired through inheritance or donation, the “the date on which the inheritance commences or the date on which the inheritance commences,” the Plaintiff acquired the ownership of shares from the deceased EE on August 22, 1970 at the time of commencement of inheritance through an agreement.

In addition, the ownership transfer registration under the Plaintiff’s sole name, which was completed on November 17, 201 with respect to 65-20 square meters of 0,385 square meters in ○○○ Dong, is merely a pure partition of co-owned property pursuant to the instant judgment, and cannot be said to have acquired the said 65-20 forest land and 9,385 square meters from that time, as the Plaintiff asserted. The above ○○-dong, 65-1 forest and 9,384 square meters and the above 05-20 forest and 65-209,385 square meters in ○○-dong, 000 and 65-200 square meters in 0,000 and was established and finalized as a single ownership of the Plaintiff and BB, which are merely the scope of control over the property subject to co-owned property division pursuant to the instant judgment, and it cannot be deemed to have been changed to 200,000 square meters of forest and co-owned property.

In addition, when calculating gains from transfer following the transfer of the instant land, which was divided into 65-1 forest land in 0,000 square meters in 19,772 square meters in 0,000, the acquisition time of the instant land should be deemed not on November 17, 201, but on August 22, 1970, the date of acquisition of the first common property, namely, the date of acquisition on August 22, 1985, which was the date of commencing the partition of co-owned property in the instant case.

Ultimately, the instant disposition is lawful, and the Defendant’s assertion on a different premise is without merit.

3. Conclusion

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