Methods of calculating acquisition value in calculating capital gains tax;

If it is possible to know the standard market price of the acquisition date when the transfer income tax is reported and paid later, the standard market price of the year shall be applied.

2014Guhap5053 The revocation of the revocation of the capital gains tax rectification

1. The grandchildren 2.B

CC director of the tax office

July 3, 2014

August 14, 2014

1. The Defendant’s rejection disposition against each of the Plaintiffs on March 27, 2013 is revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The decision is as follows (the plaintiff stated in the complaint that the date of disposition was April 1, 2013, but it seems to be a clerical error).

1. Details of the disposition;

A. On February 17, 1997, the Plaintiffs: (a) completed the registration of ownership transfer for one-half shares of each of the 1/2 shares of OO-dong O-dong 3404-1 (hereinafter “instant land”); and (b) on February 18, 201, upon the transfer of the instant land on February 18, 201, the Plaintiffs reported and paid the transfer value as OOO, the acquisition value as OOO won, the officially assessed individual land price (standard market price) in 1996; and (c) the transfer value as OOO won in the case of capital gains as OOO on March 7, 201.

B. After that, on February 22, 2013, the Plaintiffs filed a request for correction to the effect that the date of acquisition of the instant land falls under February 17, 1997 by applying the officially assessed individual land price (OOO/Mam2) in 1997. However, the Defendant rejected the Plaintiffs’ request for correction on March 27 of the same year (hereinafter “each of the instant dispositions”).

C. On April 4, 2013, the Plaintiffs were dissatisfied with each of the instant dispositions and filed an appeal with the Tax Tribunal, but was dismissed on December 30, 2013.

Facts that there is no dispute over the basis of recognition, entries in Gap evidence 1 through 6 (including paper numbers), the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

On February 17, 1997, when the acquisition value is deducted from the necessary expenses for the return and payment of the transfer income tax of this case, the plaintiffs calculated the acquisition value by applying the standard market price in 1997, which is the immediately preceding year, pursuant to Article 164(3) of the Enforcement Decree of the Income Tax Act. However, the above provisions of the Enforcement Decree provide for exceptional cases where the standard market price in the immediately preceding year is not publicly announced on the date of acquisition or transfer, and where it is possible to know the standard market price at the time of reporting and paying the transfer income tax after the date of acquisition, the standard market price of the year concerned shall apply. Thus, each disposition of this case refusing to request for correction by recognizing the amount according to the standard market price in 1997 as the acquisition value is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) According to Articles 94(1), 96(1), 97(1)1(a), and 97(2)1(b) of the former Income Tax Act (amended by Act No. 12738, Jun. 3, 2014; hereinafter the same), the transfer value and acquisition value shall be calculated based on the actual transaction value. In this case, if it is impossible to determine the actual transaction value at the time of acquisition, the amount calculated by applying the transaction value, appraisal value, or conversion value in sequence as prescribed by the Presidential Decree may be deemed the acquisition value. Meanwhile, Article 97(5) of the former Income Tax Act provides that “the necessary matters concerning the calculation of necessary expenses, such as the scope of the actual transaction value required for acquisition, calculation of gift tax amount, etc., shall be prescribed by the Presidential Decree.” Article 163(9) and 164(3) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 24823, Nov. 5, 2013);

In addition, Article 60 (1) and (3) of the Inheritance Tax and Gift Tax Act provides that "the value of property on which inheritance tax or gift tax is levied shall be the market price as of the date inheritance commences or the date of donation, and where it is difficult to calculate the market price, the value assessed by the methods stipulated in Articles 61 through 65 in consideration of the type, size, transaction circumstances, etc. of the property concerned shall be deemed the market price." Article 61 (1) 1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "The officially assessed individual land price shall be determined as the method of assessing real estate, and in applying

(2) On January 1 of each year, the officially assessed individual land price is deemed to have been announced on January 1 of each year, but the time necessary to investigate the current status of land for the calculation of such officially assessed individual land price is to be made only after the lapse of a period from the basic date. However, if the officially assessed individual land price of the preceding year is not publicly announced at the time of acquisition or transfer under Article 164(3) of the former Enforcement Decree of the Income Tax Act, it is only exceptional provision that if the officially assessed individual land price of the preceding year is not publicly announced at the time of acquisition, it is not applicable by analogy and extension of the above provision even if it is possible after that year’s acquisition (see, e.g., Supreme Court Decisions 2012Du858, Jan. 31, 2013; 2010Du26841, Aug. 30, 2012).

Therefore, it is reasonable to view that each acquisition value of the plaintiffs' land of this case is an OOO members under the officially assessed individual land price in 1997 (=OOO members x 198.3 square meters x 1/2 shares). Therefore, each disposition of this case which rejected plaintiffs' request for correction is unlawful.

3. Conclusion

It is so decided as per Disposition by the assent of all participating Justices on the ground that the plaintiffs' claims are reasonable.