Cho High Court Decision 2010Du3769 ( December 23, 2010)

If the compensation for expropriation of inherited land has been granted to the creditors of the inheritee, it shall be applicable to capital gains.

Even if the compensation that was acquired by inheritance, and the land was expropriated and paid was paid to the obligees of the inheritee, and the inheritor did not actually receive it, it can be said that there is capital gains in effect since it has the economic effect of extinguishing the inheritance obligation due to inheritance.

2011Gudan4582 Revocation of Disposition of Imposing capital gains tax

LAA

Head of Seodaemun Tax Office

October 12, 2011

November 2, 2011

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff

The Defendant’s disposition of imposition of KRW 39,390,165 against the Plaintiff on September 2, 2010 is revoked.

1. Details of the disposition;

A. The deceased LB (hereinafter referred to as “the deceased”) owned one half of the total 0-00 square meters (hereinafter referred to as “the instant real property”) of Goyang-gu O-dong O-dong 0-661 square meters (hereinafter referred to as “the deceased”). As the deceased died on October 6, 200, the deceased’s wife, the Plaintiff, the E-E, and the most FF jointly succeeded to the property.

B. On May 8, 2002, the Plaintiff reported the qualified acceptance to the government branch of the Seoul District Court on May 27, 2002, and was sentenced to the qualified acceptance by the above court 2002Ra432.

C. Meanwhile, on the other hand, on the land of this case, the reservation of May 11, 1998 as to the purchase and sale as of May 11, 1998 as the cause of registration.

12. The provisional registration of the right to claim the full transfer of shares in the name of tinD was completed, but on January 31, 2008, the entire share transfer registration in the name of tinD was completed on the basis of the provisional registration, and on October 11, 2007, the Korea Land Corporation (current Korea Land and Housing Corporation) acquired the ownership after accepting the land of this case on October 11, 2007, and cancelled the above transfer registration in the name of tinD on February 21, 2008, and on behalf of the heir including the plaintiff, the inheritance registration and the registration of transfer in the name of the Korea Land Corporation was completed.

D. The compensation for the instant land was KRW 528,567,920 among them, and the amount of the Plaintiff’s inheritance shares was KRW 176,189,306, and the full amount of the compensation was paid on October 11, 2007 to the Goyang Tax Office, Mapo-gu Office, and Mapo-gu Office, which attached the compensation claim.

E. The Defendant: (a) deemed that the expropriation of the instant land constitutes the transfer date; (b) deemed the date of commencing the inheritance to be the date of acquisition; and (c) calculated gains on transfer by deeming the date of transfer such as transfer under the name of the Korea Land Corporation as the date of transfer; and (b) imposed the Plaintiff KRW 39,390,160 on September 2, 2010 as the capital

[Reasons for Recognition] Any non-contentious private theory, Gap evidence 2, 3, Eul evidence 1 to 3, and this court

Results of each fact-finding with respect to Goyang Registry and Korea Land & Housing Corporation

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Since the compensation incurred from the expropriation of the instant land belongs to both the state that is the inheritance obligee, and the transfer income of the instant land does not belong to the Plaintiff, the instant disposition, based on the Plaintiff’s apparent transfer income, was unlawful by violating the principle of substantial taxation.

(2) The registration of seizure was completed due to a failure to pay taxes exceeding KRW 1.2 billion at the time of the deceased’s death, and provisional registration was completed under the name of tinD, making it impossible for the Plaintiff to realize the instant land through auction. On the other hand, in view of the fact that the State did not immediately proceed with the sale of the instant land, the instant disposition was unlawful, contrary to the principle of tax fairness and the principle of good faith.

(3) On May 11, 1998, the above tinD entered into a purchase agreement with the deceased to purchase the land of this case in KRW 60 million, and paid KRW 50 million as the subscription amount. On October 17, 2007, the remaining 10 million was deposited to the deceased’s heir, including the plaintiff, and then filed a lawsuit seeking implementation of the principal registration based on provisional registration against the deceased’s heir on the ground of the above purchase promise, and completed the registration of ownership transfer based on the final judgment of the above lawsuit, but was cancelled due to the land expropriation that was previously completed. The plaintiff is obligated to compensate for the damages not acquired the ownership of the land of this case due to the failure to perform the obligation to transfer ownership to the above tinD, and the compensation amount should be considered as the acquisition cost of the land of this case. The disposition of this case is unlawful since it is not considered as the acquisition cost of this case.

B. Determination

(1) Determination on the first argument

The qualified acceptance of inheritance succeeds to the inherited property and the inherited property. However, although the inherited property and the inherited property are succeeded to all, it is assumed that the inherited property is liable for the repayment of the inherited property only within the extent of the inherited property by separating the debt and the liability, and thus, it is premised on the succession of the inherited property (a qualified acceptor is limited to the liability for the inherited property within the scope of inherited property, not to exclude or limit the qualified acceptor's succession to the comprehensive rights and obligations regarding the inherited property). The plaintiff acquired the land of this case with other inheritors regardless of the transfer registration in the name of the plaintiff by inheritance by the deceased on October 6, 200. The transferor of the land of this case expropriated to the Korea Land Corporation is the deceased, such as the plaintiff, etc., and the compensation belongs to the plaintiff, etc. as capital gains, even if the plaintiff was unable to actually receive the compensation, the compensation is delivered to the creditors of the inheritee, and thus, the plaintiff has a substantial income. Therefore, the plaintiff's assertion in this case is without merit, contrary to the principle of substantial taxation.

(2) Judgment on the second argument

The Civil Act provides that a qualified acceptor may, within five days from the date of qualified acceptance, publicly announce the fact of qualified acceptance and report his claim or receipt within the period of not less than two months (Article 1032), and refuse to repay the inheritance claim before the expiration of the period of public notice (Article 1033). The inherited property shall be repaid within the said period without prejudice to the rights of creditors with preferential rights (Article 1034), and then the testamentary donee shall be reimbursed (Article 1036). If it is necessary to sell all or part of the inherited property for such repayment, the Civil Execution Act provides that the inherited property shall be liquidated rapidly and appropriately (Article 1037). Even if the provisional registration of DD name and the registration of seizure of other creditors are completed on the land of this case, the plaintiff's right to claim for the transfer of ownership cannot be seen as being unlawful if the plaintiff's right to claim the transfer of ownership is not exercised promptly and appropriately pursuant to the above provisions of the Civil Act.

(3) Judgment on the third argument

tinD’s remainder payment of the land of this case and ownership transfer registration claim after the expropriation of the land of this case were not made even after the completion of the pre-sale, and it is difficult to view it as a real right holder, such as deposit of balance and ownership transfer registration claim after the expropriation of the land of this case. Even after the registration of transfer was cancelled, it is difficult to view it as a real right holder, such as failing to seek liability for damages for the Plaintiff, etc., even after the cancellation of the registration of transfer under one’s own name, and if tinD was in arrears with taxes exceeding KRW 1.2 billion against the deceased from the time of inheritance as alleged by the Plaintiff, and it cannot be deemed that tinD suffered from the failure to acquire the land of this case, it cannot be deemed that tinD suffered from the expropriation of the land of this case. Furthermore, even if tinD suffered from the expropriation of the land of this case, it is determined according to the general principles under the Civil Act, i.e., whether the Plaintiff is liable to compensate tinD for damages due to the expropriation of this case.

(4) Therefore, the instant disposition imposing capital gains tax on the Plaintiff is legitimate, and all of the Plaintiff’s arguments are without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.