Seocho 2018 Schedules721 ( October 15, 2018)
It is difficult to see that this transaction example reflects the legitimate market price.
Although the market price should be reflected in the objective exchange price formed by a normal transaction, it is reasonable to view that the transaction example of this case includes the amount of money in the nature of agreed money or consolation money rather than reflecting the fair market price.
Article 60 of the Inheritance Tax and Gift Tax Act (Principles of Appraisal, etc.)
2018Guhap74273 Revocation of Disposition of Levying Inheritance Tax
O Head of tax office
May 3, 2019
May 31, 2019
1. The part of the disposition imposing inheritance tax of KRW 1,025,749,220 (including additional tax) against the Plaintiff on September 6, 2017, which exceeds KRW 775,792,589 (including additional tax) shall be revoked.
2. The costs of the lawsuit are assessed against the defendant.
The same shall apply to the order.
1. Details of the disposition;
A. On May 8, 2016, the deceased (hereinafter referred to as "the decedent") owns 270,000 shares (the par value of 5,000 won per share; hereinafter referred to as "the shares of this case") issued by a stock-listed corporation, AA (hereinafter referred to as "the corporation of this case") and died on May 8, 2016. The deceased's spouse's "OO", "OO", "O", "O", and the plaintiff inherited the property of the inheritee including the above shares.
B. The heir, including the Plaintiff, did not have “the value that is normally deemed to have been established when a free transaction is made between many unspecified persons (hereinafter “market price”) regarding the instant shares,” under Article 60(1) and (2) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 14388, Dec. 20, 2016); and the heir calculated the value per share as an OO by applying a supplementary evaluation method, and filed an inheritance tax return on October 31, 2016.
C. After examining the inheritance tax on the decedent from May 15, 2017 to August 14, 2017, the director of the regional tax office confirmed that the BBB, who was an executive officer of the instant corporation, sold the shares of the instant corporation at KRW 5,000 per share with a face value of KRW 5,000 per share (hereinafter referred to as the “instant transaction”), and notified the Defendant of the taxation data on the content that one transaction example of the instant shares is KRW 5,000 per share, and the Defendant accordingly notified the heir, including the Plaintiff, of the taxation data on September 13, 2017.
D. As to this, the Plaintiff filed a tax appeal on December 1, 2017, but was dismissed on May 15, 2018.
2. Whether the instant disposition is lawful
A. The plaintiff's assertion
The price of the instant transaction does not fall under the market price formed by a normal transaction that properly reflects the objective exchange value of the instant shares, and thus, the instant disposition based on the transaction price is unlawful.
B. Relevant statutes
It is as shown in the attached Form.
1) According to Article 60(1) of the former Inheritance Tax and Gift Tax Act, the value of the property on which an inheritance tax is levied is based on the market price as of the date of donation, and its “market price” refers to the objective exchange price formed through normal transactions in principle. In order for the transaction price to be deemed as the market price at the time of inheritance, there must be circumstances to view that the transaction price objectively reflects the general and normal exchange value (see Supreme Court Decision 2005Du5574, Aug. 23, 2007).
2) In light of the following circumstances that can be recognized by comprehensively taking account of the descriptions of Gap evidence Nos. 1 through 19, the witness’s testimony and the purport of the entire pleadings, the evidence presented by the defendant alone cannot be deemed as properly reflecting the general and normal exchange value, and there is no sufficient evidence to acknowledge otherwise.
A) The instant corporation: (a) recorded the net loss of the 2013 OO in 2013, OOO in 2014, and OOO in 2015; (b) did not have been disposed of in 2015; and (c) accordingly, the assessment per share based on the financial statements as of the end of 2015 was OO; and (d) there was no circumstance to expect an increase in future value of the instant shares.
B) In light of the following circumstances, it is reasonable to view that the instant transaction was conducted in a series of consultations related to having the instant corporation retire BB against its will, and rather than reflecting the fair market price of the instant stocks, the amount of agreed money or consolation money due to retirement of BB is included.
The Corporation (A) and BB (B) of this case agree with a view to clarifying all matters arising from the occurrence of the causes for retirement of B as follows:
3. A shall pay B retirement allowances calculated in accordance with the 'Registration Officer', retirement allowances and retirement allowance payment rules enacted in accordance with the articles of incorporation within one month from the date of submission of a written resignation.’
4. A shall purchase 34,00 common shares issued by B by the end of December, 2015 through other shareholders or third parties at KRW 5,000 per share;
5. Eul will submit to Gap a separate written oath at the time of retirement after he has been aware and signed in detail.
BB was an internal director holding 34,00 shares of the instant corporation from the time the instant corporation was established on September 20, 2012. On April 30, 2015, the instant corporation received a request for disciplinary action against BB from the Small and Medium Business Administration, and implemented the request on May 4, 2015, and subsequently decided to retire BB. The instant corporation drafted a written agreement (hereinafter “instant agreement”) with BB on September 9, 2015, as follows:
(2) BB submitted a resignation letter on September 30, 2015, and concluded a contract to receive KRW 21,600,000 each quarter in return for providing investment advisory services to the instant corporation as of October 2, 2015 (hereinafter “instant advisory contract”). However, when the project, which BB had been in charge, was in loss or in dispute over a contract, the instant corporation sent a certificate of termination of the instant advisory contract to BB on March 17, 2016, when only one-time advisory fee was paid.
(3) BB paid advisory fees to the instant corporation as the termination of the instant advisory contract cannot be recognized, and sent several certificates of content to request BB to sell the instant shares in face value according to the instant agreement. The content certification sent on April 1, 2016 by BB includes the following:
5. The purport of the initial advisory contract is to pay honorary retirement allowances or consolation benefits to the principal at the time of the principal’s retirement, as seen in the main contents of the instant agreement and the instant advisory agreement, and it is concluded in order to pay such honorary retirement allowances or consolation benefits to the principal at the time of the principal’s retirement, and to immediately request the termination of the advisory contract.
6. In addition, according to Article 4 of the instant agreement, your company was responsible for and disposed of the shares of his own possession by the end of 2015, but it has not yet been implemented, and there is a lot of difficulties due to the absence of any reply even if it was sent by the performance promotion agencies on March 3, 2016. The prompt processing is re-written once.
(4) On June 30, 2016, KK, who was appointed as the representative director of the instant corporation, had engaged in the instant transaction in KRW 5,00 per share exceeding the value of the instant shares presumed by the instant corporation at the time, as a result of the negotiations conducted in order to resolve the dispute over the purchase of shares and advisory fees pursuant to the instant agreement four times, or one time.
3) Therefore, the instant disposition that is based on the premise that the instant transaction value is “market price under Article 60(1) of the former Inheritance Tax and Gift Tax Act” is unlawful.
Therefore, the plaintiff's claim is reasonable, and it is so decided as per Disposition.