early 209 Heavy2125 (Law No. 9.15, 2009)

Appropriateness of the assertion that a title trustee is deemed to have been entitled to constructive gift from stock low-price acquisition.

It is reasonable to view the Plaintiff as a real owner in view of the following: (a) although it is alleged as a title trustee with respect to deemed donation due to low-price acquisition of shares, it is not prohibited from stockholding due to bad credit holder; (b) if it is intended to title trust, it may be the close relative relationship; and (c) there

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s imposition of KRW 270,930,420,20,205, and KRW 7,605,080 on June 9, 2005 against the Plaintiff on January 2, 2009 (the date of January 9, 2009 seems to be a clerical error) is revoked.

1. Details of disposition;

A. On June 9, 2005, the Plaintiff acquired shares 28,749 shares of AA Industry Development Co., Ltd. (hereinafter “AA industry”), shares 25,00 shares of the said company from DoD, and shares 9,300 shares of the said company from DoD (hereinafter collectively referred to as “instant shares”) from DoD in KRW 10,00 per share (hereinafter referred to as “instant trading”).

B. The director of the Central Tax Office takes over property at a price lower than the market price under the provisions of Article 35 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007; hereinafter referred to as the "Gift Tax Act") and Article 26 of the former Enforcement Decree of the Gift Tax Act (amended by Presidential Decree No. 18989 of Aug. 5, 2005; hereinafter referred to as the "Enforcement Decree of the Gift Tax Act"), considering that the transaction of this case constitutes "the case of taking over property at a price lower than the market price", according to the method of assessment under Article 63 (1) 1 (c) of the Gift Tax Act and Article 54 of the Enforcement Decree of the Gift Tax Act, the amount assessed at KRW 47,490 per share of stocks of the AA industry at the time of the transaction of this case shall be calculated by multiplying the difference between the above amount and the sales price per share by the number of stocks of the AA industry.

C. The Defendant issued the instant disposition imposing gift tax to the Plaintiff, as stated in the purport of the claim, and the specific details of the disposition are as follows.

D. On April 2, 2009, the Plaintiff filed an appeal with the Tax Tribunal on April 2, 2009, but July 15, 2009

was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 5, Eul evidence Nos. 1, 2, 3, and 6 (including each number), the purport of the whole pleadings

2. Whether the disposition is proper; and

A. The plaintiff principal

While KimE was engaged in a construction business by starting a business on September 2, 1994, it transferred the above company's management rights and shares to KimF couple, a fraud, around November 2004. However, KimF was registered as a bad credit holder at the time, and thus, he was unable to transfer the above company's shares under the name of the Plaintiff. The Plaintiff was against the disposition of this case premised on the fact that the Plaintiff did not acquire the profits from the acquisition of the shares of this case because it was merely a person who was not the actual owner of the shares of this case but the title trustee.

(b) Related statutes;

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) (State)G Construction (Change to AA industry on November 17, 2006) is a company established on September 2, 1994 for the purpose of civil engineering, construction work, etc.

2) From around 1996, NewCC repeated the appointment and resignation of directors of (ju)G Construction, and on February 7, 2001, it was appointed as the representative director of the above company. On December 20, 2003, it was reappointed as a director of the AA industry on December 20, 2005.

3) On May 13, 2005, the Plaintiff was appointed as the representative director of the AA industry and was reappointed on March 16, 2008, and KimF was appointed as a director of the said company on September 2, 2006.

4) The statement on changes in the AA industry’s stocks in the business year of 2005 include 78,749 shares, DuD 25,00 shares, DuD 25,00 shares, MaB 9,300 shares, MaH 70 shares, and 63,749 shares, and 50,00 shares that the Plaintiff acquired.

5) On June 7, 2007, the Plaintiff drafted a transfer contract under which the instant shares were transferred to KimF in KRW 10,000 per share.

6) As of February 2010, the shares issued by AA industry are 340.00 shares totaling 340.00 shares. Of this, the KimF holds 265,001 shares (7.94%) and 74.99 shares (22.06 shares) held by Kim GF, the wife of KimF.

[Reasons for Recognition] The aforementioned evidence, Gap evidence Nos. 3, 6, 7, 8, 9, Eul evidence No. 4 (including each number), the purport of the whole pleadings

D. Determination

The key issue of the instant case is whether the Plaintiff is either the actual owner of the instant shares or the title trustee of KimF.

1) Facts consistent with or favorable to the Plaintiff’s assertion

The following facts can be acknowledged according to the evidence mentioned above, Gap evidence Nos. 4, 10, and 11 (including paper numbers), and witness KimF's testimony.

① The KimF, as of May 1, 2005, prepared a confirmation document stating that “The Plaintiff was delegated with all rights to the AAA industry operation and acquired shares, from 1997 to 2007, the Plaintiff was in title trust with respect to the instant shares in a state of bad financial credit standing,” and testified in this court to the same effect. ② At the request of the KimE, newCC: (2) 50,000 shares of the AA industry, which were held in the name of the GE, were transferred to the Plaintiff without receipt of the price, to the Plaintiff; (3) DoD prepared a confirmation document stating that “The Plaintiff was transferred 25,000 shares of the AA industry, which were held in the name of the GEF, to the Plaintiff at the request of the Plaintiff, 1997 to the Plaintiff; and (4) KimBF, who was in the name of the HE, 28,749 shares issued to the Plaintiff at the request of the Seoul Central District Court, 19080 shares were transferred to the Plaintiff.

2) Facts that do not comply with the Plaintiff’s assertion or are disadvantageous.

If the whole purport of the pleading is integrated in the evidence above, it is also recognized as follows.

① On December 22, 1999, during the period of registering the Plaintiff’s bad credit holders, the FF KimF was appointed as a director of the GG Construction on December 22, 199. ② On June 7, 2007, the Plaintiff drafted a share acquisition agreement to the effect that “The Plaintiff transferred the instant shares to GimF in total at KRW 637,490,000 per share.” ③ The Plaintiff filed a transfer income tax report with the tax authority to the effect that the Plaintiff transferred the instant shares to GimF. ④ Around November 2004, there was no report with the tax authority that the Plaintiff received the instant shares from GE. ⑤ The KimF had not been reported to the tax authority around November 2004.

3) Sub-determination

The facts are as follows: (a) KimF failed to submit direct data to recognize the fact that he was in a state of bad financial credit standing status from 1997 to 2007; (b) it is not prohibited from holding shares; (c) if KimF intended to title trust to another person due to bad financial credit standing problem, he could have been in a title trust to his wife Kim Jong-sung or a close relative, not a third party; (d) the total amount of shares that the Plaintiff acquired is merely 18.75% of the total shares issued by the AA industry 340,000 shares; (e) the Plaintiff was paid an annual salary of KRW 50,000 as the representative director of the AA industry for a long time, and the possibility that the Plaintiff would have acquired the shares of this case on the condition that he became the representative director of the AA industry; (e) it is difficult to eliminate the possibility that the Plaintiff would have acquired the shares of this case from the 100,000 won on the condition that he became the representative director of the A industry; (e evidence of this case 1 to 7).

3. Conclusion

If so, the plaintiff's claim for objection case is without merit.