It is reasonable to view that there is a quid pro quo relationship based on a certain correlation or economic rationality with the labor provided, which is included in the earned income.

Since it is reasonable to see that there is a quid pro quo relationship based on a certain correlation or economic rationality with the labor provided, it is not listed in the Income Tax Act, but it is included in the earned income, and the occurrence of the economic profit equivalent to the difference between the market price of the relevant stocks and the exercising price of the stock shall be deemed that the earned income is generated at

Article 20 of the Income Tax Act

Article 38 (Scope of Labor Incomes)

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

1. As to the grounds of appeal Nos. 1, 2, and 5

Wage and salary income under Article 20 (1) of the Income Tax Act, regardless of the form or name of payment, shall include not only all economic benefits in the nature of the provision of labor and the relationship of compensation, but also benefits which form the contents of the working conditions closely related to the provision of labor on the premise of the work.

According to the reasoning of the judgment below, the court below confirmed that the plaintiffs received profits equivalent to the amount calculated by converting the difference between the price of exercise of stock option (actual acquisition price) at the market price as of the date of exercise by exercising stock option by exercising stock option from each foreign parent company that held 100% of the shares of domestic subsidiaries when they worked as executive officers and employees of each foreign parent company established in Korea by investing 100% from each foreign parent company and each foreign parent company, and then exercising stock option from 1997 to 2000. Thus, the plaintiffs' profits of exercising stock option are paid to the plaintiffs by foreign parent companies that directly or indirectly affect the management, performance of their duties, or economic rationality of domestic subsidiaries, and it is reasonable to view that the plaintiffs' profits of exercising stock option were paid to the plaintiffs by foreign parent companies that are directly or indirectly affected by the management of domestic subsidiaries, and thus, they do not constitute Class B earned income under Article 20 (1) 2 (b) of the Income Tax Act, which is not listed in the employment contract between the plaintiffs and foreign parent companies.

The decision of the court below to the same purport is correct, and there are no errors in the misapprehension of legal principles as to the nature of profit from exercising stock option, or in the misapprehension of legal principles as to wage and salary income under Article 20 (1) of the Income Tax Act, or in

2. As to the third ground for appeal

In order to determine that income which is subject to income tax has been realized, even if it is not necessary until it is realized, the income should be considerably mature and confirmed in the possibility of realizing the income, and it is merely established without reaching such a degree (see, e.g., Supreme Court Decision 2001Du7176, Dec. 26, 2003). The stock option is entirely entrusted to the choice of the officer or staff who has been granted the right to exercise the stock option. Thus, the granting itself of the stock option cannot be deemed to have generated any income, and the economic profit equivalent to the difference between the market price of the stock and the price for exercising the stock option should be determined or realized only when acquiring the stocks by exercising the stock option. Therefore, the income arising from the exercise of the stock option shall be deemed to have accrued at the time of the above exercise.

The court below's decision that the profit of exercising stock options in this case constitutes earned income in the taxable period to which the time of exercising stock options belongs is justified in accordance with the above legal principles, and there are no errors in the misapprehension of legal principles as to the time of generating earned income

3. As to the fourth ground for appeal

Article 24 (2) of the Income Tax Act provides that the income amount shall be calculated on the basis of the price at the time of transaction, so the court below's calculation of the profit from exercising the stock option of this case as of the date of exercising the stock option of this case by converting the difference between the price at which the stock option is exercised and the price at which the stock option is exercised as of the date of exercising the stock option of this case is calculated on the basis of the basic exchange is correct

4. Regarding ground of appeal No. 6

Under the tax law, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, a taxpayer’s intention or negligence is not considered, and the site, error, etc. of a statute does not constitute justifiable grounds that do not constitute a breach of duty (see, e.g., Supreme Court Decision 2002Du10780, Jun. 24, 2004).

In the same purport, the court below held that at the time of exercising the stock option of this case in 197 to 2000, there was no direct and express provision on stock option under the Income Tax Act and the Enforcement Decree of the Income Tax Act, which is the time when the plaintiffs exercised the stock option of this case, and therefore there was a question as to whether the profits from exercising the stock option of this case are subject to taxation, or that the defendants' disposition of this case was made in around 2002 to 2003, it does not constitute a case where there was a justifiable reason not attributable to the plaintiffs' negligence of duty, and there was no error of law

The Supreme Court precedents pointed out in the grounds of appeal by the plaintiffs are different from this case, and it is inappropriate to invoke this case.

5. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.