Transfer 2014-0079 (2014.05.08)

Expenses incurred in relation to the occupancy of a lessee shall not be deemed capital expenditure.

It is legitimate that it does not reflect the increase in prices and the amount of expenditure claimed by the plaintiff in calculating capital gains.

Article 97 of the Income Tax Act (Calculation of Necessary Expenses for Transfer Income)

2014Guhap21586 Demanding revocation of imposition, including capital gains tax

The United States of America

Head of Suwon Tax Office

January 16, 2015

February 13, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of capital gains tax OOOO on December 10, 2013 by the Plaintiff is revoked.

1. Details of the disposition;

On September 3, 1992, the Plaintiff: (a) sold the instant real estate to EOOB and thisCC on April 22, 201; (b) sold the instant real estate to EOOOOB on June 16, 201; and (c) completed the registration of ownership transfer in the future of EOOB and thisCC, each of 1/2 shares of 1/2 shares in the housing of 15-4 above ground 2, OO-dong 15-4, OO-dong 192.

On December 10, 2013, the Defendant imposed capital gains tax and penalty tax on the Plaintiff on December 10, 2013 (hereinafter “instant disposition”).

Accordingly, the plaintiff filed a request for examination with the Commissioner of the National Tax Service on April 11, 2014, but the Commissioner of the National Tax Service dismissed it on May 8, 2014.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 1 through 3, 7, 9, 10 (including paper numbers; hereinafter the same shall apply), Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Summary of the plaintiff's assertion

Around July 192, 192, the Plaintiff spent at least a total sum of OOOOs to deliver the instant real estate, to repair the instant real estate, to install urban gas, to replace gas distribution plates, and to replace boilers. Considering the price increase in the period during which the Plaintiff owned the instant real estate, the instant disposition was unlawful, as there was no transfer margin on the instant real estate.

3. Determination

A. The price increased during the holding period of the instant real estate under the former Income Tax Act (amended by Act No. 11611, Jan. 1, 2013; hereinafter the same) is not subject to consideration in determining the tax base of transfer income. The period of approximately 11 years, which owns the instant real estate, recognized the special long-term holding deduction OO for the instant disposition (No. 1).

B. The tax authority shall bear the burden of proving the tax base that is the basis of taxation in a lawsuit seeking revocation of the global income tax disposition, and the tax base is deducted from necessary expenses, so the tax authority shall bear the burden of proving revenues and necessary expenses in principle. However, since the tax authority is not only favorable to the taxpayer, but most of the facts generating necessary expenses are located within the territory under the control of the taxpayer, and thus the tax authority is difficult to prove. Thus, if it is reasonable to have the taxpayer prove the tax base in consideration of difficulty in proof or equity between the parties, it accords with the concept of fairness (see, e.g., Supreme Court Decisions 2002Du1588, Sept. 23, 2004; 2006Du16137, Oct. 26, 2007).

The Plaintiff asserted that the delivery order of the instant real estate was issued on July 192, 192, the repair work of the instant real estate, the installation work of urban gas, the replacement of gas distribution board, and the replacement of boiler at least a total sum of OOOOOOs were disbursed. Among them, some of the items are likely to constitute necessary expenses of transferred assets as "expenses paid for the alteration, improvement, or convenience of the use of transferred assets" under Article 97 (1) 2 of the former Income Tax Act, and Article 163 (3) 3 of the Enforcement Decree of the Income Tax Act. However, there is no evidence to prove otherwise.

C. Therefore, it is legitimate that the price increase and the amount of expenditure claimed by the Plaintiff are not reflected in calculating capital gains in the instant disposition.

4. Conclusion

Thus, the plaintiff's claim is dismissed as it is without merit.