Appellate Court 2017Seo3097 ( November 23, 2017)

Whether the acquisition value of inherited real estate may be the value appraised pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act.

The acquisition value of inherited real estate shall be the acquisition value of the inherited real estate appraised by the provisions of Articles 60 through 66 of the Inheritance Tax and Gift Tax Act.

Necessary expenses for transfer assets under Article 163 (9) of the Enforcement Decree of the Income Tax Act

2018 old-gu 54487 Disposition rejecting capital gains tax rectification

○ Kim

○ Head of tax office

on January 18, 2018

November 27, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's refusal to correct the transfer income tax for the year 2016 against the plaintiff on December 6, 2016 shall be revoked.

1. Details of the disposition;

A. The deceased KimA (hereinafter referred to as "the deceased") died on October 4, 2004, and the deceased's heir was the wife KimB, the Plaintiff, KimCC, and KimD.

B. On April 7, 2005, the Plaintiff reported to the head of ○○ Tax Office the deduction amount of KRW 470,804,280 (=30,000,00 for inherited property value - funeral expenses of KRW 1,00,00,000 for KRW 00,00 for the deceased’s inherited property (hereinafter “instant land”; hereinafter “the instant building”); 475,804,280 for the aggregate of the officially assessed land price and the building standard market value of the inherited property; 470,804,280 for the inherited property value of KRW 475,80,00 for the inherited property value - funeral expenses of KRW 5,00,000 for the inherited property value of KRW 1,00,000,000 for the inherited property; ○○ Tax Office reported the inheritance tax base amount of KRW 1,00,000 for the inherited property value of KRW 398,394,2009,4000 for the instant property value of KRW 930036.

C. On March 24, 2006, the Plaintiff completed the registration of ownership transfer based on inheritance by consultation and division on October 4, 2004, and on April 22, 2016, on the instant real estate, on April 15, 2016, ○○○-ro six urban environment rearrangement project association’s registration of ownership transfer based on expropriation was completed on April 15, 2016. The Plaintiff received KRW 1,348,373,920 (i.e., the instant land 1,314,40,000 + KRW 33,973,920) as compensation for losses for the instant real estate.

D. On June 30, 2016, the Plaintiff reported and paid KRW 476,769,590,590, which was the aggregate of the officially assessed individual land price and the building standard market price on the commencement date of the inheritance (i.e., the instant land 466,40,000 + KRW 10,369,590,000, which was the aggregate of the individual land price and the building standard market price on the commencement date of the inheritance) to the Defendant, as KRW 473,672,180, which was the amount obtained by subtracting the depreciation cost of KRW 3,097,410, which was already deducted from the rental income of the instant real estate from the leased income of the instant real estate from KRW 1,348,373,920, the transfer value was KRW

E. On October 13, 2016, the Plaintiff filed a claim for correction with the purport that the acquisition value of the instant real estate should be calculated as KRW 988,234,90 (the amount calculated by the head of ○○ Tax Office in the above paragraph (b) was calculated as the inherited property value of the instant real estate) and the Plaintiff would refund KRW 116,342,630 out of the transfer income tax reverted to the year 2016 paid by the Plaintiff. On December 6, 2016, the Defendant issued a disposition rejecting the Plaintiff’s claim for correction on the ground that the acquisition value of the instant real estate originally reported by the Plaintiff was justifiable in KRW 476,769,590 (hereinafter “instant disposition”).

F. The Plaintiff dissatisfied with the instant disposition and filed an objection on February 6, 2017. However, on March 23, 2017, the Director of the △△ Regional Tax Office dismissed the Plaintiff’s objection. The Plaintiff filed an appeal on June 19, 2017, but the Tax Tribunal dismissed the Plaintiff’s appeal on November 23, 2017.

[Reasons for Recognition] Unsatisfy, Gap evidence Nos. 1, 3, 4, 6, 7, Eul evidence Nos. 1 through 7, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The inheritance tax is determined by imposing tax liability. Meanwhile, according to Article 60 of the Inheritance Tax and Gift Tax Act, the value of the inherited property should, in principle, be based on the “market price,” i.e., the value that is generally recognized as being constituted where transactions are freely made between many and unspecified persons, and only when it is difficult to calculate the market price, the value assessed by the supplementary assessment method shall be

The Plaintiff initially filed a report on the inheritance tax base concerning the instant real estate with the head of ○○ Tax Office.

The ○○○ Head of the tax office assessed the value of the instant real estate as a supplementary assessment method and reported it to KRW 475,80,280. The ○○ Head of the tax office decided the value of the instant real estate to KRW 988,234,90 and notified the Plaintiff’s mother KimB (the above notification also affects the Plaintiff). Considering the circumstances that the above amount determined by the ○○ Head of the tax office is consistent with the real estate price at the time of the instant real estate in fact, it shall be deemed that the above amount was determined as the “value generally recognized as being constituted when transactions are made freely between many and unspecified persons, i.e., the market price of the instant real estate.” Even if the value of the instant real estate determined by the ○○ Head of the tax office was illegally calculated, even if such determination of the value of the inherited property was made, the above determination of the value of the inherited property shall have binding, fair,

Furthermore, the "acquisition value of inherited property" under Article 163 (9) of the Enforcement Decree of the Income Tax Act refers to the "value of inherited property appraised under Articles 60 through 66 of the Inheritance Tax and Gift Tax Act", and it cannot be different from each other. Although there was no correction and notification of tax base under Articles 76 (4) and 77 of the Inheritance Tax and Gift Tax Act as to the act of determining the value of inherited property by the head of ○○ Tax Office which exists a valid existence as above, the defendant made the disposition of this case on the premise that the acquisition value of the real property of this case belonging to inherited property is different from the value of inherited property determined by the head of ○○ Tax Office. The disposition of this case is contrary to the validity of the decision

2) In addition, the decision of the head of ○○ Tax Office to determine the value of the instant real estate as KRW 988,234,900 and notify it constitutes an official statement of opinion, and the Plaintiff trusted this and applied for the instant correction claim. The instant disposition contrary thereto is against the principle of trust protection and the principle of good faith.

B. Relevant statutes

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

C. Determination

1) Character of the director of the tax office’s determination of the value of inherited property

The so-called binding, fair, and conclusive administrative act refers to an administrative act of an administrative agency under public law, which directly affects the rights and obligations of the general public by ordering the establishment of rights or the burden of obligations under Acts and subordinate statutes, or giving rise to other legal effects (see, e.g., Supreme Court Decision 2010Du3541, Sept. 27, 2012). As such, the determination of the value of inherited property by the head of a tax office as a prior procedure of a tax disposition does not in itself directly affect the rights and obligations of a taxpayer, and thus, it cannot be deemed an administrative act with fair and conclusive power (see, e.g., Supreme Court Decision 2001Du2652, Nov. 26, 2002).

Moreover, in this case, the value of the inherited property reported by the Plaintiff and the value of the inherited property determined by the head of ○○ Tax Office to increase the amount of the inherited property falls short of 1,000,000,000 won for both inheritance deduction amount limit, and in some cases, the tax base shall be the same as zero won and the inheritance tax

Therefore, the plaintiff's assertion that the head of ○○ Tax Office's decision on the value of the inherited property in this case constitutes an administrative act is without merit.

2) Determination of acquisition value of the instant real estate

A) In calculating gains on transfer of inherited property, the acquisition value shall be deemed the actual transaction value as at the time of acquisition [the main text of Article 97(1)1 of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016); the main text of Article 163(9) of the Enforcement Decree of the Income Tax Act]. Meanwhile, the value of the property on which inheritance tax is levied is equivalent to the market value as at the date of commencing the inheritance (the main text of Article 60(1) of the Inheritance Tax and Gift Tax Act). The “market price” includes the value generally deemed to be established when transactions are freely occur between many and unspecified persons, including the expropriation price, public sale price, and appraisal price (Article 60(2) of the Inheritance Tax and Gift Tax Act); in cases where it is difficult to calculate the market price, the “the officially assessed individual land price under the Act on Publication of Real Estate” was determined by the Commissioner of the National Tax Service, taking into account the new construction price, structure, location, and new construction year.

B) In light of the following circumstances, it is reasonable to view that the Plaintiff’s 988,234,900 won claimed by the Plaintiff as of the commencement date of the instant real estate as the date of commencing the inheritance, and it is difficult to compute the market price at the commencement date of the instant real estate as of the commencement date of the inheritance. Thus, it is difficult for the Defendant to calculate the acquisition value of the instant real estate as of the commencement date of the inheritance by adding the acquisition value to the 476,769,590 won (=46,40,000 won for the instant land + KRW 10,369,590 for the aggregate of the officially assessed land price and the standard market price of the instant building on the commencement date of the inheritance) based on the premise that the instant disposition should be calculated by adding the overall purport of the pleadings to the 466,400,000 won for the instant land

○ There is no evidence to deem that there exists a value generally recognized as being constituted in the event of free transaction between many and unspecified persons at the time of the commencement of the instant inheritance.

○ The Plaintiff asserted that the head of ○○ Tax Office determined the value of the instant real estate as KRW 98,234,90 in consideration of the market price. However, there is no ground to view such determination, and rather, the head of ○○ Tax Office calculated the value of the instant real estate as above is calculated based on the individual housing price publicly notified after the commencement of inheritance. It appears to have been due to an error in the calculation that combines the standard market price of the instant building’s totaling KRW 466,40,00,000.

According to Article 60(2) of the Inheritance Tax and Gift Tax Act and the main text of Article 49(1) of the Enforcement Decree of the same Act, in order to recognize the expropriation price, public auction price, appraisal price, etc. as the market price of inherited property in principle, the sale, appraisal, expropriation, auction, or public auction shall be conducted within six months before or after the base date of appraisal (the base date of appraisal). However, there was no case of sale, appraisal, expropriation, auction, or public auction with respect to the real property in this case within six months after

3) Whether it violates the principle of trust protection or the principle of trust and good faith

A) In general, in order to apply the principle of trust and good faith to the acts of the tax authorities in tax and legal relations, the tax authorities should first express public opinion that is the object of trust to taxpayers, second, there is no reason attributable to taxpayers for the trust of the tax authorities to believe that the name of the opinion of the tax authorities is justifiable, third, the taxpayer must trust the name of the opinion and perform what is it is, and fourth, the tax authorities should make a disposition contrary to the above opinion that is contrary to the above opinion list, thereby infringing the taxpayer's interest (see, e.g., Supreme Court Decision 2007Du7741, Oct. 29). Meanwhile, even if the tax authorities applied the value assessed as a supplement because it is difficult to calculate the market price while assessing inherited property to impose inheritance tax, it cannot be deemed that the tax authorities expressed public opinion that the value is applied as the actual transaction price at the time of acquisition in calculating gains from transfer following the transfer of inherited property (see, e.g., Supreme Court Decision 2002Du6911, Aug. 222, 2003).

B) In light of the aforementioned legal principles and the purport of the precedents, even if the director of the ○○ Tax Office applied the value of the instant real estate to KRW 98,234,90 in calculating the taxable value of the inherited property regarding the instant real estate, it cannot be deemed that the Plaintiff expressed a public opinion that the said value will be applied as acquisition value in calculating gains on transfer following the transfer of the instant real estate. Accordingly, the Plaintiff’s assertion on a different premise is without merit, and without merit.

3. Conclusion

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

Relevant statutes

(1) The former Income Tax Act (Amended by Act No. 14389, Dec. 20, 2016)

Article 97 (Calculation of Necessary Expenses in Transfer Income)

(1) Necessary expenses to be deducted from the transfer value when calculating gains on transfer of a resident shall be as follows:

1. Acquisition value:

(a) The actual transaction price incurred in the acquisition of assets under subparagraphs of Article 94 (1);

【Enforcement Decree of the Income Tax Act

Article 163 (Necessary Expenses for Transferred Assets)

(9) In applying Article 97 (1) 1 (a) of the Act to assets received by inheritance or donation (excluding donations under Articles 33 through 39, 39-2, 39-3, 40, 41-2 through 41-5, 42, 42-2, and 42-3 of the Inheritance Tax and Gift Tax Act), the values appraised pursuant to Articles 60 through 66 of the Inheritance Tax and Gift Tax Act as of the date of commencing an inheritance or donation shall be deemed the actual transaction values at the time of acquisition (the latter part is omitted).

m. Inheritance Tax and Gift Tax Act

Article 60 (Principles, etc. of Appraisal)

(1) The value of property on which inheritance tax or gift tax is levied under this Act shall depend on the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal").

(2) The market price referred to in paragraph (1) shall be the value generally deemed to be formed where transactions are made freely between many and unspecified persons and shall include the expropriation price, public sale price, appraisal price, and others recognized as the market price, as prescribed by Presidential Decree

(3) Where it is difficult to compute the market price in applying paragraph (1), the value appraised by any method prescribed in Articles 61 through 65 in consideration of the type, scale, transaction status, etc. of the relevant property shall be deemed the market

Article 61 (Appraisal of Real Estate, etc.)

(1) Real estate shall be appraised by any of the following methods:

1. Land:

The officially assessed individual land price under the Act on the Public Announcement of Real Estate Values (hereinafter referred to as "officially assessed individual land price").

2. Buildings:

The value calculated and publicly announced by the Commissioner of the National Tax Service at least once a year in consideration of the newly built price, structure, use, location, year of construction, etc. of a building (excluding buildings falling under subparagraphs 3 and 4);

【Enforcement Decree of the Inheritance Tax and Gift Tax Act

Article 49 (General Principles, etc. of Appraisal)

(1) In cases of sale, appraisal, expropriation, auction (referring to an auction under the Civil Execution Act; hereafter the same shall apply in this paragraph) or public auction (hereafter referred to as "sale, etc." in this Article) during a period of not more than six months before or after the evaluation base date (in cases of donated property, three months; hereafter the same shall apply in this paragraph), and others recognized as the market price, as prescribed by Presidential Decree, such as the expropriation price, public auction price, appraisal price, etc. under Article 60 (2) of the Act, means the amount verified as follows:

1) It appears that an error was found in the calculation, and the aggregate of the officially assessed individual land price and the standard market price of the building on the date of commencing the inheritance of the instant real estate is 476,769,590 won (land 466,400,000 + building 10,369,590 won), as seen in the following sub-paragraph (d).