(a) In a case where the site owner newly built a building with the funds of a third party as a condition of return after gratuitous use for a certain period and undergone a completion inspection in its name, whether it can be deemed that such children acquire the ownership of the building by donation;

(b)in the case of paragraph (a), whether, in the calculation of the taxable amount of gift taxes, the amount of the rent for the building during the period of free use should be deducted;

(c) The method of calculating the rent under paragraph (02);

A. In a case where a site owner, on his/her own land, newly constructed a building in his/her name with a third party's construction fund and received an inspection of completion in his/her name and completed registration of preservation of ownership in his/her name, on condition that it shall be returned after use and profit-making thereon for 10 years, and thereafter, the site owner contributed to the right to use the land for 10 years for the purpose of acquiring the ownership of the building to his/her own children, and as a result, he/she acquired the ownership of the building by undergoing an inspection of completion in his/her name as his/her father, who is the site owner, as the owner of the land, and actually acquired the ownership of the building by donation of the site owner.

(b)In the case of paragraph (a), children, who are the donee, have the obligation to allow a third party to use the building free of charge for ten years due to the donation. In calculating the taxable amount of gift taxes, the value of the obligation that such third party would allow to use the building free of charge for ten years from the value of the building at the time of the acquisition of the building, i.e., the amount equivalent to the rent for the building for ten years;

(c)‘A’, barring any special circumstance, the value of the building at the time of the acquisition of the building shall be the amount equivalent to the construction cost, and that construction cost shall be the same amount as the ten-year rent for the building and land, which is offset by the ten-year rent for the building and land, and thus, barring any special circumstance, the amount may be calculated by dividing it to the value of the land and building in proportion to its 10-year rent for that building.

A.B. Article 29-2(1)1(a) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990); Article 554(b) of the Civil Act; Article 29-4(1) of the Inheritance Tax Act

(a)B. (c) Supreme Court Decision 93Nu1824 delivered on December 22, 1994 (dong). Supreme Court Decision 89Nu1582 delivered on December 12, 1989 (Gong1990,284). Supreme Court Decision 89Nu5898 delivered on November 28, 1989 (Gong190,175).

[Judgment of the court below]

Head of Western Tax Office

Seoul High Court Decision 91Gu15319 delivered on December 11, 1992

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal by the Plaintiff’s attorney are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. According to the reasoning of the judgment below, in this case where the proof of the source of financing for the acquisition of the land of this case is insufficient, the court below held that the land of this case is owned by the above non-party 3 who purchased its own funds and registered the transfer of ownership in his own front instead of the property under title trust with the plaintiff, non-party 1, and non-party 2 (hereinafter referred to as "the plaintiff, etc.")'s father to the non-party 3, who is his father, rather than the property under title trust with the non-party 3, the above non-party 3 purchased the land of this case with his own funds, and registered the transfer of ownership in his own front. In comparison with the records, the above judgment of the court below is just and acceptable

2. According to the reasoning of the judgment below, the court below acknowledged the following facts: the non-party 3 provided construction expenses to the non-party 4 and agreed to return the building on the land of this case after using it for the next ten years; the non-party 4 obtained a construction permit on March 30, 198 with the owner of the building of this case as the non-party 3; the non-party 5,00,000 construction cost of the above new construction work was awarded a contract to the non-party 5,00 won; the building owner changed the name of the non-party 3 from the above non-party 3 to the name of the plaintiff et al. on June 16 of the same year and completed the completion inspection on July 12 of the same year; the non-party 3 did not directly construct the building of this case under the non-party 9's name to the non-party 3, who acquired the ownership of the building of this case and completed the completion inspection on the non-party 3's name, etc.

However, if the facts are as determined by the court below, the non-party 3 contributed the right to use the building of this case to the plaintiff et al. who is his own child for the purpose of acquiring the ownership of the building of this case for ten years, and as a result, the plaintiff et al. acquired the ownership of the building of this case under the name of the plaintiff et al. as to the building of this case as intended by the non-party 3. Thus, it can be deemed that the plaintiff et al. acquired the ownership of the building of this case by the donation of the above non-party 3. However, the plaintiff et al., who is the donee, bears the obligation to allow the non-party 4 to gratuitously use the building of this case for ten years

Therefore, in calculating the taxable amount of gift taxes of this case, the value of the obligation that the plaintiff, etc. would allow to use the building of this case for 10 years from the value of the building at the time of acquiring the building of this case, i.e., the amount equivalent to the rent for the building of this case for 10 years. In this case, the value of the building of this case at the time of acquiring the building of this case, unless there are special circumstances, shall be the amount equivalent to 540,00,000, which is the construction cost for the building of this case. The construction cost of this case is offset against the ten-year rental fee for the building of this case and land of this case, and thus, it shall be the same amount as the ten-year rental fee for the building of this case, barring special circumstances, can be calculated by dividing the above amount in proportion to

Nevertheless, the court below held that the total amount of the construction cost as above is the gift value. Thus, the court below erred in the misapprehension of legal principles as to the calculation of the taxable amount of gift taxes, and it is clear that such illegality has affected the conclusion of the judgment. Thus, there is a reason to point this out.

3. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Sung-sung (Presiding Justice)