West 46012-10711, 202.04.02

A corporation

If a corporation's payment of a reward to an outstanding employee under a prior agreement is recognized as a normal transaction in light of sound social norms and commercial practices, it may be included in deductible expenses for the calculation of the income amount for each business year, however, whether it falls under the question is determined according to the substance.

E-In the case of inquiries, the tax treatment of the prototypes, etc. paid by the multi-level marketing corporation to the nationwide branch offices and independent center in the transaction relation, shall be sent as shown by attaching the corresponding case of our Office No. 46012-447 ( February 16, 2000).*, a corporation 46012-447 and February 16, 2000, in case where it is deemed that it is a normal transaction in the light of sound social norms and commercial practice to select the excellent employees of the agency responsible for repairing the products sold by it under the prior agreement, the relevant reward may be included in the calculation of the income amount for each business year, but whether it falls under the question is determined according to the substance of the agreement.

Article 19 (Scope of Losses)

1. A summary of the contents of inquiry;

Pursuant to the Door-to-Door Sales Act, the multi-level marketing company that sells our goods only through multi-level marketing salespersonss is planned to plan a new 30-year commemorative event and to announce that if sales are more than the actual results publicly announced at the nationwide branch office and independent center before the event is held, the company will be entitled to collect taxes from the multi-level marketing company.

If such events are held, how the cost classification for the private goods, etc. should be made.

(A) Multi-stage salesmen are entertainment expenses to facilitate transactional relations because they are related with the company and for a specific person.

(B) The sales incidental cost is the expense incidental to the sales or purchase transaction, provided that the terms and conditions of payment are agreed in advance between the parties to the contract, and in our case, it is published in advance and the private goods are provided in accordance with the contents of the publication, so it constitutes the sales incidental cost.

2. Materials on the contents of questioning;

(a) relevant tax laws and regulations (law, enforcement decree, enforcement rule, basic rules);

○ Article 19 of the Corporate Tax Act (Scope of Losses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of a corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act (amended by Act No. 558, Dec. 28, 1998)

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated in connection with the business of a corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes (amended by Act No. 5580, Dec. 28, 1998).

(3) Matters necessary for the scope and types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by the Presidential Decree.

[Scope of Loss] Article 19 of the Enforcement Decree of the Corporate Tax Act

Losses under the provisions of Article 19 (1) of the Act shall be those as provided in the following subparagraphs, except as otherwise prescribed by the Act and this Decree:

1. The purchase value of raw materials of commodities or manufactured goods sold (not including purchase overcharge amounts and purchase discount amounts under corporate accounting standards) and incidental expenses (not including December 31, 198);

2.-17. (hereinafter referred to as "abdoes")

【Enforcement Rule of the Corporate Tax Act 【Scope of Expenses Incidental to Sale】

The incidental expenses for goods or products sold under subparagraph 1 of Article 19 of the Decree shall be the amount within the scope of normal transactions in the light of sound social norms and commercial practices, which is appropriated in accordance with corporate accounting standards (referring to the accounting standards under each subparagraph of Article 79 of the Decree; hereinafter the same shall apply).

○ General Rule 19-193 【Scope of Sales Incidental Expenses】

In case of examples of the scope of sales incidental expenses under Article 10 of the Rule, the following subparagraphs shall be applied (amended on November 1, 2001):

1. Sales commission paid to the Association pursuant to a prior agreement;

2. The expenses actually paid in the transaction with the trustee.

3. The value of several items, caps, shopping bags, etc. which a corporation operating the tourism business and travel arrangement business makes available to customers free of charge;

4. The value of beverages, etc. that a person provides to the users of the facility within the extent of service cost, as incidental to the use of the facility;

5. The amount equivalent to the value of the monthly publication for the same month where the monthly publication in which the specified amount is published is increased gratuitously to the purchaser of his own product for a certain period;

6. The value of products, goods, etc. offered as free gifts in order to promote sale;

7. An amount which is of a nature similar to those as referred to in subparagraphs 1 through 6.

(b) Similar cases (judicial precedents, judicial precedents, review precedents, and established rules);

○ Corporation 46012-447, February 16, 200

Where a corporation selects excellent employees in charge of repairing the products it sells in accordance with a prior agreement and the payment of a reward is deemed to be a normal transaction in light of sound social norms and commercial practices, the relevant reward may be included in deductible expenses for the calculation of the income amount of each business year; however, whether it falls under the question of whether it falls under the question of whether it falls under the question of whether it is based on the substance of the contract.