National High Court Decision 2000Du2370 ( October 06, 2001)

Donations

Dismissal

A disposition that is imposed because it is not proven that the payment of price is made between persons with a special relationship is not made.

Article 32 of the Inheritance Tax and Gift Tax Act (Taxables Subject to Donation)

I dismiss the appeal.

1. A shooting room;

The claimant, who is in office as a business director of the OOOO Co., Ltd. (hereinafter referred to as the "OOO") outside the claim, acquired 15,000 shares (hereinafter referred to as the "OO's shares") from the non-claimed OO(hereinafter referred to as the "OO") on April 2, 1998. The OO made a preliminary return of capital gains tax on June 30, 1998 in relation to the transfer of the shares in question to the Sungnam Tax Office, and the disposition authority decided and notified that the claimant is a specially related person under tax law as the OO's shares, and that the OO's shares were transferred gratuitously.

On April 27, 2000, the claimant filed an appeal on August 25, 200.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

(1) Since it can be objectively proved that the shares at issue have been acquired at a cost, it should be deemed a transfer rather than a gift. The claimant acquired the shares by transferring an apartment house owned by the principal in 1996 and secured the funds for the acquisition of the shares in 1997, and there was a surplus of funds due to corporate bonds interest, etc. in January 1998, and the intermediate payment of KRW 60,000,000 in February 198, and the remainder payment of KRW 60,000 in April 1998, and KRW 135,000 in total,00 in stock acquisition funds.

(2) The imposition of gift tax by deeming the relevant transaction as a gift pursuant to Article 32 of the Inheritance Tax and Gift Tax Act is an infringement on the legal stability and predictability of the taxpayer, and the imposition of gift tax by estimating the relevant transaction as a gift pursuant to Article 44(2) of the Inheritance Tax and Gift Tax Act is unreasonable. Furthermore, the claimant is an unjust disposition that infringes on the taxpayer’s property right by imposing the burden of proof on the other person who is not his spouse or lineal ascendant or descendant.

(b) Opinions of disposition agencies;

The claimant, as an OO's private village intermediary, is in office as a business director of the key corporation. From 1994 to 1997, the average amount of the wage and salary income after the tax has been paid is merely 14,687,000 won per year, and it appears in the DB data. Since the OO's economic power is the transferor of the key shares, there is no reason to transfer the key shares of the key corporation, which is a family company at a cost, to the claimant, and there was no reason to receive the transfer money from the claimant as the result of investigating the details of the OO's financial transaction. The claimant secured the statement that he was not aware of the fact of the transfer of the key shares and the fact that he was not aware of the payment of the purchase price, unlike the claimant's assertion, so it is reasonable that the OO has transferred the outstanding shares without compensation to reduce the inheritance tax burden.

3. Issues and judgments

(a) Points in dispute;

propriety of the disposition imposing the gift tax by deeming that the shares at issue were transferred without compensation;

(b) Related statutes;

Where tangible or intangible property, or legal or de facto rights, etc. are directly or indirectly transferred from a person with a special relationship, which can calculate economic value, the gift tax shall be levied on the property, rights, etc. gratuitously transferred.

(1) Any property transferred to the spouse or a lineal ascendant or descendant (hereafter in this Article, referred to as the “spouse, etc.”) shall be presumed to have been donated to the spouse, etc. at the time of transfer by the transferor of the relevant property.

(2) Where a person in a special relationship as prescribed by the Presidential Decree transfers any property transferred to another person to his spouse, etc. within three years from the date of transfer, the original transferor shall be presumed to have directly donated the property value as at the time of transfer to his spouse, etc.

(3) Paragraphs (1) and (2) shall not apply to cases falling under any of the following subparagraphs:

1. Where it has been disposed by a ruling of the court;

2. Where a disposition is taken due to bankruptcy;

3. In case of the public auction under the National Tax Collection Act;

4. Cases of securities disposed of through the Korea Stock Exchange; and

5. Where it is evident that his/her spouse, etc. has received compensation and transferred it as prescribed by Presidential Decree.

(c) Markets:

(1) The key shares were transferred to the claimant on April 2, 1998, immediately before the death of the OO, the transferor, and the claimant was investigated and confirmed by the disposition authority as it was an entity having a special relationship as an OO's title and is in office as a business director of the key corporation.

(2) The claimant failed to make an accurate statement on the details of the funds to acquire the stocks at issue in a written statement prepared at the time of investigation into the disposition agency on May 10, 1999, and made a statement that the contract was not made under his/her own responsibility is present in the hearing materials of the disposition agency.

(3) We examine the real estate transaction details before and after the acquisition of the outstanding shares by the claimant's DB data. The remaining amount of the transfer price is limited to KRW 15,342,00,00, and the average amount of the three-year earned income from 1994 to 1997 is merely KRW 14,687,000 per annum. It is difficult to view the transferor's OO as the source of funds of KRW 150,000,000, which is the material of acquiring the outstanding shares. The transferor's OO died on May 31, 198, which was one month before the death of 198. It appears that there is no reasonable reason to transfer the outstanding shares of the family company rapidly, and OOO's O's OO's O's O's O's O's OO was written at the time of the investigation by the agency.

(4) We find it difficult to accept the claim because the claimant has failed to present specific and objective evidence related to the acquisition of the outstanding shares, such as the fact that the OOO did not make a detailed statement about the receipt of the outstanding shares, and that the OO did not present specific and objective evidence related to the acquisition of the outstanding shares, because it appears that the OO did not have any reasonable reason to transfer the shares for consideration to the claimant having a special relation with the company's outstanding shares; that the source of the funds for acquiring the outstanding shares is not specifically proven; that the fact of payment of the outstanding shares is not verified through the financial data of the OO as the transferor; that the statement prepared by the claimant does not have any specific statement about the funds for acquiring the outstanding shares; that the OO as the wife did not provide specific statements related to the receipt of the outstanding shares.

D. Conclusion

This case shall be decided as ordered in accordance with Articles 81 and 65 (1) 2 of the Framework Act on National Taxes, because the petition for appeal is groundless as a result of the review.