[Judgment of the court below]

the director of the tax office of Western

April 5, 2012

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 219 million for the year 2008 against the Plaintiff on December 9, 2010 is revoked.

1. Details of the disposition;

A. On August 22, 2008, Nonparty 1 (the Nonparty in the judgment of the Supreme Court) transferred the land (number 1, 2, and 3 omitted) of the Gyeyang-gu Incheon Gyeyang-gu Campaign, and died on June 2, 2010 without paying the transfer income tax.

B. On June 22, 2010, the Plaintiff, as a beneficiary of the Deceased’s wife, received KRW 300 million of the deceased’s death benefit. On August 31, 2010, the Plaintiff reported inheritance tax on KRW 219 million equivalent to the insurance premium (56 of the 75-time insurance premium paid by the deceased until the deceased’s death as the policyholder, the remainder 19 times of the insurance premium paid by the deceased as the policyholder) borne by the deceased (hereinafter “instant insurance premium”).

C. On July 7, 2010, the Plaintiff reported the renunciation of inheritance to the Incheon District Court No. 2010-Ma1576, Jul. 15, 2010, along with Nonparty 2 and Nonparty 3, who is a child, prior to filing an inheritance tax return, and filed a report with the judgment on July 15, 2010.

D. The Defendant: (a) deemed that the instant insurance proceeds were inherited property pursuant to Article 8 of the Inheritance Tax and Gift Tax Act (hereinafter “Inheritance Tax Act”); and (b) deemed that the deceased’s duty to pay taxes was succeeded to the Plaintiff, Nonparty 2, and Nonparty 3, and thus, was jointly and severally liable for tax payment; and (c) rendered the instant disposition imposing capital gains tax of KRW 219 million on the Plaintiff on December 9, 2010.

E. On February 10, 201, the Plaintiff appealed and filed an appeal with the Tax Tribunal on February 10, 201, but the appeal was dismissed on June 21, 201.

[Ground of recognition] Unsatisfy, Gap evidence 1 to 5, Eul evidence 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Since the instant insurance money is the Plaintiff’s proprietary property under the Civil Act, it is deemed as inherited property only for the calculation of inheritance, not “property acquired by inheritance” as stipulated in Article 24 of the Framework Act on National Taxes, and the Plaintiff’s liability to pay capital gains tax is not succeeded by waiver of the deceased’s inheritance. Thus, the instant disposition

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 8 of the Inheritance Tax and Gift Tax Act provides that "insurance money of life or non-life insurance received by an ancestor due to the death of an ancestor and received by an insurance contract which is a policyholder shall be deemed inherited property." Article 24 (1) of the Framework Act on National Taxes provides that "the heir (including testamentary donee at the time of commencement of inheritance; hereinafter the same shall apply) or administrator of inherited property under Article 1053 of the Civil Act shall be liable to pay national taxes, surcharges, and expenses for disposition on default imposed on or to be paid by the ancestor within the scope of inherited property." The issue of this case is whether insurance money considered as inherited property pursuant to Article 8 of the Inheritance Tax and Gift Tax Act constitutes "property acquired by inheritance" under Article 24 (1) of the Framework Act

In light of the following circumstances, the purport of the relevant Acts and subordinate statutes and arguments, namely, ① Article 8 of the Inheritance Tax and Gift Tax Act only provides that insurance money shall be deemed inherited property and does not provide that such provision shall be deemed to be applied only to the calculation of inheritance tax, and it is difficult to find grounds to limit the calculation of inheritance tax under the Inheritance Tax and Gift Tax Act. ② Rather, the above provision provides that insurance money which an ancestor actually pays insurance money and receives without compensation on the ground of his/her death has the character as financial assets supplementing his/her income ability for the purpose of guaranteeing the livelihood of his/her bereaved family members, and the economic substance does not differ from inherited property under the Civil Act. In light of whether the legal form and economic substance are inconsistent with each other, taxation and substance principle by pursuing the economic substance and imposing it on it, and whether it constitutes inherited property to prevent artificial evasion of inheritance tax (see, e.g., Constitutional Court en banc Decision 2007HunBa137, Nov. 26, 2009).

Therefore, the insurance money of this case constitutes “property acquired by inheritance” under Article 24(1) of the Framework Act on National Taxes, and the disposition of this case by the defendant on the same premise is lawful, and the plaintiff’s assertion on a different premise is without merit.

3. Conclusion

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

[Attachment Form 5]

Judges anti-Japanese (Presiding Justice) Kim Young-young