The market price is a value generally accepted as such if a transaction is made freely between many and unspecified persons;

The instant sales contract was concluded more than two months after the date of the key transaction, and there was no reason to view the transaction value as an objectively unfair transaction, such as transaction with a related party. Thus, it is clear that the transaction value was the market value within three months before or after the evaluation date stipulated in the main sentence of Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

Article 60 of the former Inheritance Tax and Gift Tax Act

2017Guhap14309 Revocation of Disposition of Imposing gift tax

○ Kim

○ Head of Tax Office and two others

. 2018.13

October 25, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

As to the Plaintiff, the imposition of the gift tax reverted to April 13, 2015 by the head of the Highyang Tax Office on April 13, 2017 *******(including additional tax) and each imposition of the gift tax reverted to April 6, 2015 by the head of the Highyang Tax Office and the head of the Namyang Tax Office on April 6, 2017 *****(including additional tax).

1. Details of the disposition;

A. A. The Dispute Resolution* A.I.D. (hereinafter “instant company”) was an unlisted company established for the purpose of running the real estate development business on April 15, 201, and the Plaintiff acquired 60,000 shares of the instant company in the name of the Plaintiff (45,000 shares) and ChoA (15,000 shares) as of December 5, 2013.

B. On April 30, 2014, the instant company added to the business subject to the post-free shop business on June 23, 2014, and thereafter issued 60,000 shares on June 23, 2014. The Chinese company acquired 60,00 shares as above 60,00 shares per share 37,500 shares on the same day, and the Plaintiff was appointed as the co-representative of the instant company along with the head* (the spouse*).

C. Thereafter, on April 13, 2015, the Plaintiff acquired 60,000 shares of the instant company from this* in the name of SoB and thisCC (hereinafter “instant key transaction”), and on June 19, 2015, on June 19, 2015, the Plaintiff transferred 84,00 shares of the instant company (=60,00 shares (the name of SoCC) + 15,00 shares (the name of SoCC) + 9,000 shares (the name of the Plaintiff) + 9,00 shares (the name of the Plaintiff)] to KK (hereinafter “K”) and reported and paid capital gains tax for each share holder (hereinafter “instant sales contract”).

D. After conducting a tax investigation with respect to the Plaintiff from November 29, 2016 to February 28, 2017, the Commissioner of Busan Regional Tax Office determined that the Plaintiff acquired 60,000 shares of the instant company from this specially related party under the premise that the market price of the instant shares was KRW 77,381 per share on April 13, 2015, the Plaintiff acquired 60,000 shares of the instant company from this party under the premise that the market price of the instant shares was KRW 77,381 per share, and held that the said shares were each trusted to BB and PCC

E. Accordingly, on April 13, 2017, the head of the High Military Tax Office imposed a gift tax on title trust under Article 4(5) and Article 45-2 of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 13557, Dec. 15, 2015; hereinafter referred to as the “former Inheritance Tax and Gift Tax Act”) on the following: (a) the head of the High Military Tax Office and the head of the Namyang District Tax Office imposed a gift tax on the Plaintiff under title trust under Article 35(1) of the former Inheritance Tax and Gift Tax Act (including additional taxes; hereinafter referred to as the “instant disposition”).

F. The Plaintiff appealed and filed a petition with the Tax Tribunal on May 26, 2017. However, the Tax Tribunal dismissed the Plaintiff’s petition on August 31, 2017, and the Plaintiff was served on September 4, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 7, Eul evidence 1 to 5 (including branch numbers, if any) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Since the market price of the instant shares at the time of the key transaction cannot be seen as KRW 77,381 per share, the instant disposition that was made on a deposit basis is unreasonable.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Relevant legal principles

Article 60 (1) of the former Inheritance Tax and Gift Tax Act provides that "the value of the property on which the inheritance tax or gift tax is levied under this Act shall be based on the market price as of the date of commencing the inheritance or the date of donation (hereinafter referred to as "date of appraisal"), and Paragraph (2) of the same Article provides that "the market price under paragraph (1) shall be the value generally deemed to be established when a transaction is made freely between many and unspecified persons and shall include the amount recognized as the market price, as prescribed by Presidential Decree, such as the expropriation price, public sale price, and appraisal price," and Paragraph (3) of the same Article provides that "if it is difficult to calculate the market price in applying paragraph (1), the value appraised by the methods prescribed in Articles 61

Meanwhile, the main text of Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 26922, Jan. 22, 2016; hereinafter the same) provides that "the amount recognized as the market price as prescribed by Presidential Decree, such as the expropriation price, public sale price, appraisal price, etc." under Article 60(2) of the Act means the amount verified under any of the following subparagraphs where there is a sale, appraisal, expropriation, auction or public sale during a period not exceeding six months before or after the base date of appraisal (in cases of donated property, three months), and subparagraph 1(a) of the same Article provides that "where there is a fact of trading the relevant property, the transaction price shall be deemed as the market price, but the transaction price shall be deemed as the market price, but it shall be excluded

2) Specific determination

In full view of the following circumstances recognized by the details of the above disposition and the purport of the evidence stated in subparagraphs 5 through 7 and the entire pleadings, it is reasonable to view that the market price of the instant shares at the time of the key transaction is KRW 77,381 per share. Therefore, the prior Plaintiff’s assertion on the premise of objection is without merit.

① The instant sales contract was concluded on June 19, 2015, which was the date of the instant transaction, on April 13, 2015, and was concluded on June 19, 2015, which was two months after the date of the instant transaction. The transaction value was determined as KRW 77,381 per share, and there is no reason to view the transaction value as an objectively unfair transaction, such as transaction with a related party. Thus, it is obvious that it is the “market price as a transaction value within three months before or after the base date of appraisal as stipulated in the main sentence of Article 49(1) of the former Enforcement Decree

② In the course of sale and purchase, the Plaintiff promoted the purchase of the shares of the instant company for the purpose of expanding the business by acquiring a duty-free shop post after the holding of the instant company. The Plaintiff tried to purchase 60,000 shares from this*, but this* did not deal with the terms and conditions of the purchase of the instant shares by refusing to purchase them (payment of half of the purchase price as convertible bonds). After acquiring 60,000 shares from this* the Plaintiff sold 84,00 shares to 77,381 won per share, which is the trading price offered by the Plaintiff, with the total of 14,00 shares plus 14,000 shares held by the Plaintiff, after acquiring 60,000 shares from this*, the Plaintiff appears to have sold the said shares to the Plaintiff at 7,381 won per share (the Plaintiff’s preparatory document, 2,3,5 pages). According to this, it appears that the Plaintiff, other than a specially related party, did not have agreed to the sale and purchase price of the instant shares at 781.

(3) KK merely conducted an appraisal request with W Accounting Corporation to determine the appropriateness of the trading price. W Accounting Corporation merely conducted an appraisal request with W Accounting Corporation. It is difficult to determine that the value per share of the instant stocks at the time of appraisal base date ( December 31, 2014) is 60,915-101,152 won, and there is no reasonable ground to determine that it is inappropriate from the point of view of importance of 7,381 won per share, which is the transaction price belonging to the said scope. It is difficult to determine that the value per share of the instant stocks is 60,915-10,000 won based on W Accounting Corporation's financial data, business plan, various statistical data, and market analysis data of the relevant industry. It is also difficult to determine that the value per share of the instant stocks is 10,000 won per share, which is 6,000 won or more per share of 6,000 won per share, based on the appraisal value per share of the instant stocks at issue.

④ The Plaintiff asserts that the sales contract of this case includes 84,00 shares of this case (120,00 shares) in the sales price of KRW 77,381 per share, under the premise that it is 80% of the total number of shares of this case (120,000 shares) and thus, it is unfair to apply the market price of this case to the sales price of this case. Since the status of the largest shareholder of this case is transferred to KK due to the sales contract of this case, the sales contract of this case cannot be deemed as including the management right of this case. However, without including the value of management right of this case, W Accounting Firm objectively assessed the value of the company of this case within the scope of "60,915-101,152 won" which includes 0% shares of this case, 70,381 won per share, which is the value of the company's shares under the sales contract of this case, and thus, it cannot be concluded that it includes the issue of management right of this case in the sales price of this case.

Furthermore, as of December 31, 2014, the Plaintiff asserts to the effect that the instant market price is unfair, since the supplementary assessed value under the former Inheritance Tax and Gift Tax Act of the instant shares is “0 won.” However, in exceptional cases where it is difficult to compute the market price, the supplementary assessed value means the assessed value under the provisions of Articles 61 through 65 of the former Inheritance Tax and Gift Tax Act in consideration of the type, scale, etc. of the relevant property (Article 60(3) of the former Inheritance Tax and Gift Tax Act), so long as it is obvious that the “7,381 won per share, which is the market price of the instant shares, is normal value, the Plaintiff’s assertion on this part is not acceptable

⑤ 30,000 won per share of the company of this case holding 50% of the shares of this case at the time of trading * Trade between the plaintiff who is a shareholder of the company of this case and a joint representative director of the company of this case (Article 12-2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act). The plaintiff under tax investigation and there is no ground for evaluation as to 30,000 won per share, which is the market price of this case.* The transfer of shares to the lower price (30,000 won per share) compared with the acquisition price (37,500 won per share) * the parking lot owned by the company of this case(**2* Dong 2*333 and 22*-34) * The sale to the low price under the condition that the book value of this case is purchased at the market price of this case * The sale price of the above 30,000 won per share is unclear, and the above appraisal price of this case cannot be seen as the market price of this case.

3. Conclusion

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