Calculation of Wrongful Acts and subordinate statutes shall be prescribed by the tax authority to determine a taxpayer by reconsting the transactions under tax laws.

The provisions of wrongful calculation of capital gains are more concrete provisions which enable tax authorities to reconform donations and transfers into direct transfer transactions between the donor and the transferee and calculate the amount of income.

Article 10 of the Framework Act on National Taxes, Articles 101 and 104-3 of the Income Tax Act

2016Gudan53510 Revocation of Disposition of Imposing capital gains tax

○○ Co., Ltd.

○ Head of tax office

on October 24, 2017

on 07 05 October 2017

1. The conjunctive claim part among the plaintiff BB's lawsuit shall be dismissed.

2. The plaintiff AA's primary and conjunctive claims, and the plaintiff BB's primary claims are all dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

In the first place, on May 21, 2015, the Defendant confirmed that each disposition of KRW 90,000,000 (including additional tax) for the transfer income tax for the year 2007 against Plaintiff BB was invalid on May 28, 2015, and that each disposition of KRW 90,000 (including additional tax) for the transfer income tax for each of the years 2007 against Plaintiff BB was revoked on May 21, 2015, the Defendant provided against Plaintiff AA on May 21, 2015, and each disposition of KRW 90,000 (including additional tax) for each of the years 207 against Plaintiff BBB for each of the years 207.

1. Details of the disposition;

가. CCC은 2005. 8. 10. 구 소득세법(2007. 5. 17. 법률 제8435호로 개정되기 전의 것, 이하 같다) 제101조 제4항이 정한 특수관계자인 원고들 외 4인에게 토지거래허가구역 내에 있는 ㅇㅇ시 ㅇㅇ면 ㅇㅇ리 ㅇㅇ-ㅇ 임야 5,000㎡(이하 '이 사건 부동산'이라 한다)를 증여하였다.

나. 원고들 외 4인은 이 사건 부동산에 관하여, 2006. 00. 00. DDD와 매매계약을 체결하고, 2007. 00. 00.경 ㅇㅇ시로부터 농지전용허가 및 토지거래허가를 받은 다음, 2007. 00. 00. DDD 외 1인에게 소유권이전등기를 마쳐주었다.

C. However, on the premise that the taxpayer following the transfer of the instant real estate pursuant to Article 101(2) of the former Income Tax Act was himself, on October 0, 2006, the CCC reported and paid KRW 00,000,000 for the transfer income tax for the year 2006 due to the transfer of the instant real estate at the competent tax office (50,000,000 as the actual transaction value, the transfer value was claimed as the actual transaction value, and 40% for the tax rate on October 00, 2006).

D. However, the Defendant conducted a tax investigation of capital gains tax on around October 2015 with respect to the Plaintiffs and four other persons, and the taxpayer following the transfer of the instant real estate on October 0, 2015 with respect to Plaintiff AB on the premise that the Plaintiffs and four other persons are the Plaintiffs, and on October 0, 2015, with respect to Plaintiff BB on the premise that each of the instant real estate was the non-business land, each of the instant dispositions against Plaintiff BB on October 0, 2015 (including the non-reported additional tax of KRW 9,000,000,000,000 for additional tax of KRW 35,270,426) (including the actual transaction value of KRW 50,00,000,000 for additional tax of KRW 35,270,00 for additional tax, and KRW 60,00 on the premise that the instant real estate was the non-business land (hereinafter referred to as “instant disposition against Plaintiff B”).

E. As to the instant Disposition 1, Plaintiff BB on October 0, 2000, respectively filed an appeal against the instant Disposition 2 with the Tax Tribunal on October 0, 2015, but the Tax Tribunal dismissed Plaintiff AA’s appeal against the Plaintiff on October 00, 2016, and on October 00, 2015, the Tax Tribunal dismissed Plaintiff BB’s appeal against the Plaintiff on the ground that the period of appeal was elapsed.

[Ground of recognition] No dispute, Gap evidence Nos. 1 through 4, 9, Eul evidence Nos. 1, 3, and 4 (including paper numbers) and the purport of the whole pleadings

2. Whether the lawsuit is lawful;

Since the Defendant asserted that the part of the conjunctive claim of Plaintiff BB in the lawsuit was unlawful because it failed to observe the filing period, Plaintiff BB filed a request for a trial with the Tax Tribunal on September 21, 2015 and received a decision to dismiss the request for a trial from the Tax Tribunal on October 0, 2015, as seen earlier, and in full view of the entries and the purport of the entire pleadings in the evidence No. 5, Plaintiff BB received a written decision from the Tax Tribunal on October 0, 2015. The instant lawsuit was filed with the court on October 00, 2016. Thus, it is evident in the record that Plaintiff BB’s conjunctive claim was filed with the Court on December 20, 2016, and thus, it is unlawful for the Defendant to file a request for a trial after the lapse of the filing period of the lawsuit under Articles 5(1) and 5(3) of the former Framework Act on National Taxes (Amended by Act No. 14382, Dec. 20, 2016).

3. Whether the disposition is lawful;

A. The plaintiffs' assertion

1) The plaintiffs' primary claims

For the following reasons, each of the instant dispositions is null and void.

① Plaintiff BB did not receive a tax notice on the instant disposition. ② Each of the instant dispositions was imposed after the expiration of the exclusion period for imposition.

2) Plaintiff AA’s preliminary claim

For the following reasons, the first disposition of this case is unlawful, and its whole or part should be revoked.

① A. Pursuant to Article 101(2) of the former Income Tax Act, a taxpayer following the transfer of the instant real estate is CCC, not Plaintiff AA. (2) The transfer date of the instant real estate shall be deemed December 5, 2006, when the Plaintiffs and four other persons were paid any balance from DDD. As such, the transfer income tax following the transfer of the instant real estate shall be calculated as the standard market price pursuant to Article 96(2) of the former Income Tax Act. (3) The transfer value of the instant real estate to be located within the scope of KRW 500,00,00, and the instant real estate is not land. (4) The transfer income tax of Plaintiff A-BCC reported transfer income tax on the transfer of the instant real estate, and thus, the transfer income tax should not be imposed on Plaintiff CA on the grounds that Plaintiff AA had any justifiable reason to have failed to report and pay the transfer income tax, and even if so, the transfer income tax should not be imposed on Plaintiff CA’s actual and outstanding tax return and payment of the instant real estate.

B. Relevant statutes

Attached Form is as shown in the attached Form.

C. Determination

1) The plaintiffs' primary claims

① First, we examine whether Plaintiff B was served with a tax notice on the instant disposition No. 2.

In the case of paragraphs (2) and (3) of Article 10 of the former Framework Act on National Taxes, when a person to receive a document is not present at the place where the document is to be served, the document may be served to his/her employee and other employees or a person living together with the mental capability to make reasonable judgment. If the person to receive the document, his/her employee and other workers or a person living together with the mental capability to make reasonable judgment refuses to receive the document without justifiable grounds, the document may be placed at the place where the document is to be served. Here, "the person to make reasonable judgment as an employee or a person living together with the mental capability to make reasonable judgment" includes the person to receive the document, who is delegated with the right to receive mail or other document explicitly or explicitly, from the person to receive the document (see, e.g., Supreme Court Decision 200Du1164, Jul. 4, 200).

In full view of the purport of Eul evidence Nos. 6 through 8 and 15 (including virtual number No. 15) and the overall arguments, the defendant's public official visited the plaintiff BB on two occasions on May 21, 2015 to serve the notice of tax payment on the plaintiff BB, but failed to serve the notice of tax payment on the plaintiff BB due to the absence of closure; although the plaintiff BB's cell phone call was attempted, the defendant's public official failed to receive the notice of tax payment on May 26, 2016, but failed to serve the notice of tax payment on the plaintiff BB; the defendant's public official was also unable to receive the notice of tax payment on the plaintiff BB on the 10th day without closure; the defendant's public official failed to receive the notice of tax payment on the 20th day on May 28, 2016 on the 20th day on the 20th day on the 20th day on the 20th day on the 20th day on the 20th day on the apartment.

Therefore, we cannot accept this part of the Plaintiff BB’s assertion.

② Next, we examine whether each disposition of this case was imposed after the expiration of the exclusion period of imposition.

The Plaintiffs’ failure to file a tax base return of capital gains tax following the transfer of the instant real estate has no dispute between the parties. Thus, the exclusion period of capital gains tax following the transfer of the instant real estate is seven years from June 1, 2008 to May 31, 2015, which is the day following the end of the final tax base return of capital gains tax for the year following the year 2007 where land transaction permission was granted pursuant to Article 26-2(1)2 of the former Framework Act on National Taxes (see, e.g., Supreme Court Decision 2001Du976, Jul. 8, 2003). However, each of the instant dispositions was imposed prior to the expiration of the exclusion period of capital gains tax for the following year (see, e.g., Supreme Court Decision 2001Du9776, May 21, 2015).

Since CCC reported the transfer income tax of this case at the competent tax office on December 20, 206, the tax authority could easily have known that the Plaintiff and four other persons transferred the real estate of this case. Thus, the Plaintiffs’ assertion that the period for exclusion of transfer income tax against the Plaintiffs should be five years from June 1, 2008 to May 31, 2013 pursuant to Article 26-2(1)3 of the former Framework Act on National Taxes should not be deemed to fall under “where a taxpayer under Article 26-2(1)2 of the former Framework Act on National Taxes fails to submit a tax base return by the statutory due date for filing a tax return.”

In light of the principle of no taxation without law, the interpretation of tax laws and regulations under the principle of no taxation without law shall be made unless there are special circumstances.

It shall be interpreted as the text, and it shall not be permitted to expand or analogically interpret without any reasonable reason (see, e.g., Supreme Court Decision 2002Du9537, Jan. 24, 2003); and there is no ground to regard the exclusion period of national taxes differently depending on the recognition of the taxation authority; and even if the tax authority, as alleged by the Plaintiffs, knew that the Plaintiff and four other parties have transferred the instant real estate through the CCC’s report of capital gains tax, as long as the taxpayers following the transfer of the instant real estate are not CCC and four others, as shown below, unless the Plaintiff did not submit the tax base return by the statutory due date of return.”

Therefore, this part of the plaintiffs' assertion cannot be accepted.

2) Plaintiff AA’s preliminary claim

① First, we examine whether the taxpayer following the transfer of the instant real estate is CCC.

Article 101 (1) of the former Income Tax Act provides that when it is deemed that any act or calculation by a resident having any transfer income has reduced unreasonably the tax burden on the relevant income by any transaction with the resident and the related party, such person may calculate the amount of income for the relevant year regardless of such act or calculation. Article 101 (2) of the former Income Tax Act provides that in order to reduce unreasonably the income tax on the transfer income, if the person who donated the asset to a related party under paragraph (1) donates the asset to another person within five years from the date of donation and then transfers the asset again, the donor shall be deemed to have transferred the asset directly. Article 101 (1) of the former Income Tax Act provides that in the event that there is an act of unreasonably reducing the tax burden on the transfer income, the tax authority may reorganize the amount of income corresponding to the tax that the original party has to bear by restructuring the transaction under tax-related Acts. Article 101 (2) of the same Act provides that if any act of using the donation or transfer of asset has been done as one type of such act, the tax authority shall directly reconstruct the amount of gift and transfer transaction between the donor and transferee.

Therefore, in light of the language and purport of Article 101(2) of the former Income Tax Act, it is clear that the tax authority only determines the taxpayer for the transfer of the instant real estate by reconcing the transaction under tax-related Acts, and that the donor himself/herself or the donee does not have to confirm the donor. Accordingly, in determining the taxpayer for the transfer of the instant real estate, Article 101(2) of the former Income Tax Act cannot be applied. As long as CCC’s donation of the instant real estate to the Plaintiffs and four persons, and the transfer of the instant real estate to DD is not invalid as the most fictitious act, the taxpayer for the transfer of the instant real estate shall be deemed the Plaintiffs and four persons, not the CCC.

Therefore, we cannot accept this part of the Plaintiff AA’s assertion.

② Next, as of December 5, 2006, whether the transfer date of the instant real estate should be calculated based on the standard market price under Article 96(2) of the former Income Tax Act, the transfer value and acquisition value of the instant real estate should be calculated based on the entire transfer value and acquisition value.

Article 96(2) of the former Income Tax Act, in principle, stipulates that the transfer value of assets shall be deemed the standard market price at the time of the transfer of the relevant assets in cases where assets are transferred by December 31, 2006. Meanwhile, even if land is located within a land transaction permission zone, the time when the land is transferred, which serves as the basis for calculating capital gains, is the date of settlement of proceeds (see, e.g., Supreme Court Decision 97Nu5145, Jun. 27

D. D. The fact that D. D. paid KRW 50,00,00 to the plaintiffs and four other persons on March 2, 2017 is without dispute between the parties. The following circumstances acknowledged by comprehensively taking account of Gap evidence 3-1, witness D's testimony, witness EE's witness testimony and overall arguments, D. witness's testimony is part of the real estate purchase price of this case, which is 50,000,000 won from this court. On the other hand, the real estate transaction contract of this case is null and void when the above special agreement was not acquired. 6. The object of sale is merely 0,000,000,000,000,000 won and 0,000,0000 won and 0,000,000,000 won and 0,000,000,000 won and 0,000,000,000 won and 0,000,00,00.

Therefore, Plaintiff AA’s assertion on this part cannot be accepted.

(3) The transfer value of the real estate of this case shall be examined as follows.

A witness DD testified to the effect that “The transfer value of the instant real estate is KRW 550,00,000 or KRW 500,000 at the request of the plaintiffs and four other parties.” Although EE testified to the effect that “The transfer value of the instant real estate is KRW 500,000,000,000,” the witness EE testified to the effect that “The transfer value of the instant real estate in this court is KRW 500,000,000,00,000,000,000.” However, the following circumstances are difficult to consider as a whole the written evidence No. 13, No. 3-2, and the overall purport of the film and pleading as well as No. 3-2, and it is difficult to view that the Plaintiff and four other parties were 50,000,000,0000,000,0000,000,000,000,000,00.

(3) The court shall examine whether the real estate of this case is land for non-business use.

CCC reported the transfer income tax on the transfer of the real estate of this case at KRW 500,00,00,00 which claimed the transfer value as the actual transaction value, there is no dispute between the parties concerned. If CCC reported the transfer value of the real estate of this case on October 30, 2006, it can be deemed that the real estate of this case was the non-business land under the premise that the transfer value was reported under Article 96 (2) of the former Income Tax Act. In full view of the overall purport of the testimony of DD, evidence No. 17-1, evidence No. 17-2, and each video and pleading No. 17-2, it can be recognized that the real estate of this case was used as the "before all the plaintiffs et al. and four other persons at the time of transfer and acquisition". Thus, unless there is any assertion or proof that Plaintiff AA resided in the vicinity of the real estate of this case and there was a self-defluence of the real estate of this case, it is reasonable to view the real estate of this case as the land.

Therefore, we cannot accept this part of the Plaintiff AA’s assertion.

④ As to the issue of whether Plaintiff AA should be imposed an under-reported additional tax, not an under-reported additional tax, on the following grounds: (a) the fact that the taxpayer following the transfer of the instant real estate was the Plaintiffs and four other persons is the Plaintiff; and (b) there is no basis to regard the report of the capital gains tax by the CCC, not the taxpayer, as the return by the Plaintiff AA; and (c) therefore, Plaintiff AA is only subject to the non-reported additional tax. Accordingly, Plaintiff AA’s assertion on this part cannot be accepted.

(4) The Republic of Korea and the Republic of Korea also examines whether there is a justifiable reason for the failure of Plaintiff AA to report and pay the transfer income tax of this case, and the tax law penalty is an administrative sanction imposed in accordance with the law in order to facilitate the exercise of the taxation right and the realization of the tax claim in case the taxpayer violates the reporting and tax liability as prescribed by the law without any justifiable reason, and the taxpayer's intentional or negligent act is not considered, and the site or mistake of the law does not constitute a justifiable reason (see, e.g., Supreme Court Decision 2000Du5944, Apr. 12, 2002). Even if Plaintiff AA and CCC reported and paid the transfer income tax of this case according to the consultation of the tax accountant, as alleged by Plaintiff AA, the failure of Plaintiff AA to report and pay the transfer income tax of this case by mistake in the site or mistake of the laws and regulations by Plaintiff AA's negligence, and thus, this part of Plaintiff AA's assertion cannot be accepted.

Furthermore, as seen earlier, Plaintiff AA’s assertion that CCC is not a taxpayer for the transfer of the instant real estate, and that CCC’s report of capital gains tax should be deemed as Plaintiff AA’s report, insofar as there is no basis to deem the CCC’s report of capital gains tax not a taxpayer, it is not acceptable to accept the Plaintiff’s assertion that the penalty tax should be imposed on the unpaid amount on the basis

⑤ We examine whether each of the dispositions of this case is against the principle of trust and good faith, tax justice, and tax equity. As seen above, since the taxpayer of capital gains tax following the transfer of each of the real estate of this case was not CCC but for the plaintiffs, the plaintiff AA did not report the capital gains tax due to the land or mistake in the laws and regulations, and thus, the land, etc. of the plaintiff AA's laws and regulations are merely based on its own responsibility and cannot be deemed as illegal. Even if the defendant made each of the dispositions of this case after the lapse of the statute of limitation, unless the defendant imposed each of the dispositions of this case after the expiration of the statute of limitation period, the dispositions of this case cannot be deemed as unlawful, and the capital gains tax paid by CCC can be refunded at any time. In light of the fact that each of the dispositions of this case is contrary to the principle of trust and good faith or is contrary to the tax justice and tax equity.

Ultimately, Plaintiff AA’s assertion on this part cannot be accepted.

D. Sub-committee

Therefore, each of the dispositions of this case is legitimate.

4. Conclusion

Therefore, the part of the conjunctive claim in the plaintiff BB's lawsuit is dismissed as illegal, and all of the plaintiff AA's primary and conjunctive claims, and plaintiff BB's primary claims are dismissed as it is without merit. It is so decided as per Disposition.