Cho High Court Decision 2010Du3549 ( October 21, 2011)

The report and payment of capital gains tax under the name of the trustee can not be deemed a legitimate report and payment.

The return and payment of capital gains tax under the name of the title trustee cannot be deemed a legitimate report and payment by the taxpayer. Therefore, in imposing capital gains tax on the title truster, it is legitimate to exclude the tax deduction for preliminary return and payment under the name of the title trustee and impose additional tax.

2011Gudan12651 Revocation of Disposition of Imposing capital gains tax

The AA

○ Head of tax office

August 17, 2011

September 21, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 85,439,680 against the Plaintiff on October 18, 2010 shall be revoked.

1. Details of the disposition;

A. On March 1985, the Plaintiff acquired and owned the DBCC DB DD 411 4,370 (hereinafter “instant land”) in the name of EE, a type of each transaction, and transferred it to the FFF Corporation around June 2005.

B. On August 2005, the Plaintiff made a preliminary return of KRW 274,237,471 on the transfer margin of the instant land in the name of EE, and paid the said transfer income tax by installments on the same day and October 2005.

C. After E died on October 22, 2005, the Defendant confirmed the fact that the Plaintiff trusted the instant land to EE in the course of investigating inheritance tax on EE, and the Director of the Regional Tax Office of BB requested correction that the Plaintiff cannot be deemed to have reported and paid the transfer income tax on the instant land transfer in the name of the title trustee at the comprehensive audit on the Defendant around July 2010.

D. Accordingly, on October 8, 2010, the Defendant revoked the transfer income tax reported under this E’s name, and issued the instant disposition imposing KRW 85,439,68,68, and 850 (additional tax on negligent tax returns, KRW 40,470,830, and KRW 14,498,020), calculated by deducting the tax paid under the E’s name, and calculated by deducting the tax paid under the E’s name, KRW 85,439,680.

[Ground of Recognition] Facts without dispute, Gap evidence 1 through 4, Eul evidence 1, 2, 4, and 5 (including natural disaster)

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) The preliminary return and payment of the transfer income tax on the instant land are practically made by the Plaintiff, and all matters other than the transferor have been reported true, and the preliminary return and payment should be recognized in light of the purpose of the preliminary return and payment tax credit in order to reduce the taxpayer's additional containing, and the effect of preliminary return and payment should be recognized.

(2) The additional tax is a kind of administrative punishment, which is a sanction against a taxpayer's breach of duty, and in this case, the Plaintiff filed a preliminary return under the name of the title trustee, reported the transfer value, acquisition value, and necessary expenses in conformity with the facts, and paid the same amount as the tax amount that would have had had been paid if the return was filed under the name of the Plaintiff, and reduced the transfer income tax burden unfairly. Therefore, the additional tax amount of the instant disposition

(b) relevant statutes;

C. Determination

In the transfer of real estate held in title trust, a person who is liable to report the tax base of capital gains and pay capital gains tax according to such report is a title truster who is a taxpayer. Thus, even if a title trustee reported and paid such tax under the name of the title trustee, it cannot be deemed that there was a legitimate return and payment by the taxpayer (see Supreme Court Decision 96Nu6387, Oct. 10, 197).

Therefore, in rendering the disposition of this case, the defendant excluded the tax credit for the preliminary return and payment made in the above E E name, and imposing the tax for the additional return and the additional return for wrong payment under the above legal principle is legitimate, and it cannot be deemed that it violates the purpose of the relevant system, as alleged by the plaintiff, or that it is unlawful against the principle of non-payment.

3. Conclusion

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