As the actual purchaser of farmland is unable to obtain certification of purchase and sale of farmland, if a title trust is made in the future, whether the actual purchaser is deemed donated (negative)

If the registration of ownership transfer in the name of the intermediary is made by designating the intermediary to trust the name of the intermediary because the actual purchaser of farmland who does not reside in rural areas cannot register the ownership of the purchased farmland because it is difficult for the intermediary to obtain a certificate of farmland sale, it is obvious that the title trust is made without the purpose of gift tax evasion due to the de facto legal limitation, and therefore, it cannot be viewed as a gift by applying Article 32-2(1)(b) of the Inheritance Tax Act.

Article 32-2 of the Inheritance Tax Act, Article 19(2) of the Farmland Reform Act

[Plaintiff-Appellee] Plaintiff 1 and 2 others (Law Firm Gyeong, Attorneys Lee Gyeong-soo et al., Counsel for plaintiff-appellee)

Lee Jong-sung et al., Counsel for the defendant-appellant

Head of Pyeongtaek Tax Office

Seoul High Court Decision 89Gu9267 delivered on December 1, 1989

The appeal is dismissed.

The costs of appeal shall be borne by the defendant.

As to the Grounds of Appeal:

If the actual owner and the title holder are different under the provision of Article 32-2 of the Inheritance Tax Act, the actual owner shall be deemed to have donated the property to the title holder on the date of transfer of registration. However, since the above provision is intended to prevent the abuse of the title trust system as a means to conceal a gift with respect to the property that requires the transfer or exercise of the right, the title trust shall not be deemed to have been donated if the transferor refuses the transfer of the registration to the actual owner, or if the transfer of the registration cannot be made in the front of the actual owner, or if there is a circumstance under which the transfer cannot be made in the presence of the actual owner, or any other similar circumstance is inevitable (see Supreme Court Decision 90Nu4143, Oct. 10, 1990).

According to the reasoning of the judgment below, the court below acknowledged the situation where the real purchaser who did not reside in rural communities can not register the ownership of farmland because he was unable to obtain a certificate of farmland sale, and therefore the registration of ownership transfer for the farmland cannot be conducted under the name of the plaintiff as an individual among the real buyers who did not live in rural communities. The fact-finding by the court below is justified and there is no illegality such as the theory of lawsuit, and according to the fact-finding by the court below, it cannot be viewed as a gift by applying Article 34-2 (1) of the Inheritance Tax Act, because it is obvious that the title trust was made without the purpose of evading gift tax, and it cannot be deemed as a gift by applying Article 34-2 (1) of the Inheritance Tax Act, since the judgment below did not err by misapprehending the legal principles of Article 32-2 of the Inheritance Tax Act, and a theory of criticism cannot be adopted.

Therefore, this appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-ju (Presiding Justice)