Whether the land at issue falls under farmland as of the transfer date;

Land under Article 69 (1) of the Restriction of Special Taxation Act shall be farmland cultivated by itself for not less than eight years from the time of acquisition until the time of transfer, which is farmland as of the date of transfer; however, land at issue shall be farmland used for parking lots for a considerable period before and after the time of transfer, and shall not

2018Guhap13266 Revocation of Disposition of Imposing capital gains tax

IsaA

BB Director of the Tax Office

November 20, 2018

2019.01.08

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 90,761,540 for the Plaintiff on August 1, 2017 shall be revoked.

1. Details of the disposition;

A. On April 26, 2016, the Plaintiff entered into a sales contract with thisCC to sell 00,000 m23-3 ○○○-ri 23-3 m23-3 m257 m2 (hereinafter “23-3 m23-3 m2”) the price to KRW 1.36 billion, and completed the registration of ownership transfer on May 25, 2016.

B. As to the transfer of land No. 23-3, the Plaintiff filed a report of capital gains tax reduction or exemption for self-employed farmland pursuant to Article 69 of the former Restriction of Special Taxation Act (amended by Act No. 14390, Dec. 20, 2016; hereinafter “former Restriction of Special Taxation Act”).

C. On May 23, 2017, the Defendant issued a prior notice of taxation imposing capital gains tax of KRW 120,050,00 (including additional tax) for the year 2016, on the ground that “the Plaintiff cannot be deemed to have cultivated the land of 23-3 directly for at least eight years.” However, the Plaintiff filed a request for prior notice of taxation to the effect that the Plaintiff would be subject to the capital gains tax of KRW 120,050,00 (including additional tax) for the year 2016. On July 13, 2017, the Defendant issued a prior notice of prior notice of taxation to the Plaintiff to recognize 200 square meters of the land of 200 square meters as farmland and accordingly correct the amount of tax accordingly. Accordingly, on August 1, 2018, the Defendant issued a prior notice of imposition of capital gains tax of KRW 90,761,540 (including additional tax) (hereinafter “instant disposition”).

2. Determination on the legitimacy of the instant disposition

A. The plaintiff's assertion

The Plaintiff, while residing in BB Si ○○○-ro ○○, ○○-ro, 343 on December 31, 1974, acquired land of 23-3 on and around December 31, 2001, and was temporarily cultivated until December 31, 2001, restored to farmland on or around August 2015, and planted 23-3 land, and sold to thisCC on May 25, 2016. As such, among the land in 23-3, the Plaintiff was farmland at the time of transferring the remaining land (hereinafter referred to as “instant land”) excluding 200 square meters recognized by the Defendant as farmland, and thus, it constitutes the subject of reduction or exemption of capital gains tax. Therefore, the instant disposition imposing capital gains tax is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 69(1) of the former Restriction of Special Taxation Act provides, “The tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted with respect to the income accruing from the transfer of land prescribed by Presidential Decree, among land cultivated directly by a resident residing in the seat of farmland for at least eight years by means prescribed by Presidential Decree.” Article 66(4) and (5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 27848, Feb. 7, 2017; hereinafter “former Enforcement Decree of the Restriction of Special Taxation Act”) provides, “The land prescribed by Presidential Decree” under Article 66(1) and (5) of the same Act shall be “the land must be farmland as of the date of transfer in which he/she cultivated for at least eight years from the time of acquisition until the time of transfer.” The burden of proof on the requirements for reduction or exemption is against a taxpayer who claims reduction or exemption of capital gains tax (see, e.g., Supreme Court Decision 94Nu9

2) In light of the following facts and circumstances revealed by Gap evidence Nos. 5 through 14, Eul evidence Nos. 5 through 11, and the purport of the entire pleadings, the evidence alone submitted by the plaintiff is insufficient to recognize the land as farmland as of the transfer date, and there is no other evidence to acknowledge it otherwise.

A) The Plaintiff also recognized the fact that the instant land was not cultivated from around 2001 to August 2015, and at that time, the instant land appears to have been used as a parking lot.

B) The Plaintiff submitted a UDR’s statement (Evidence No. 11-2) stating that “The Plaintiff moved the soil to the instant land on November 2015, 2015,” but this Court stated in this Court that “E requested a UDR to return to UDR upon the Plaintiff’s request, and at the time of discussion, it is not possible to confirm that the land was partially returned to UDR on June 26, 2016.” The photographs (Evidence No. 12-1 through No. 4 of the Evidence No. 12) submitted by the Plaintiff were the photographs of Sep. 6, 2016 or of which date cannot be identified, and even based on the port photographs (Evidence No. 13-1 through No. 13-3 of the Evidence No. 13-1) submitted by the Plaintiff, it cannot be seen that the land was partially returned to 15th of the instant land at the time of the transfer.

C) A witness EE stated in this Court that “Around April 2016 at the Plaintiff’s request, 2016, she was fresh, salivated, and salivating the instant land.” On April 26, 2016, the Plaintiff entered into a sales contract to sell the instant land to thisCC.

D) The details of sales taxes by trader submitted by the Plaintiff relating to the period of suspension by the Plaintiff, or the details of sales of goods relating to scambling and chickens breeding, and thus, do not seem to be related to the cultivation of the instant land.

E) Otherwise, there is no evidence to acknowledge that the Plaintiff cultivated the instant land by cutting down, cutting down, and spawn. The instant land appears to have been leased and used as a parking lot by the ○○ Equipment Co., Ltd, a representative of the buyer on August 7, 2016, immediately after the transfer.

3) Meanwhile, Article 66(13) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "direct cultivation" under Article 69(1) of the former Enforcement Decree of the Restriction of Special Taxation Act means that "a resident is engaged in the cultivation of crops or the growing of perennial plants on his own farmland at all times or by the cultivation or cultivation with his own labor not less than 1/2 of the farming works." The evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff directly cultivated the land of this case for not less than eight years, and there is no other

3. Conclusion

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