[1] The case holding that the corporation's officers and employees' profits earned by exercising their stock options constitute "wages of a similar nature" under the latter part of Article 20 (1) 1 (a) of the Income Tax Act

[2] The case holding that the calculation of the profit from the exercise of the stock option by the executives and employees of the company is justifiable after calculating the objective exchange value of the stock at the time of exercising the stock option based on the transaction price of the stock at the time of exercising

[1] Article 20 (1) 1 (a) of the Income Tax Act / [2] Article 20 (1) 1 (a) of the Income Tax Act

Plaintiff (Attorney Kim Young-soo, Counsel for the plaintiff-appellant)

Head of the District Tax Office

Seoul High Court Decision 2004Nu16883 delivered on August 12, 2005

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

In full view of its adopted evidence, the court below held that the non-party 1 and the non-party 2, the representative director of the plaintiff company, entered into an agreement with the plaintiff company to exercise the stock option on condition of providing labor for a certain period of time, and recognized the fact that the non-party 1 and the non-party 2 exercised the stock option after providing labor for a certain period of time, and that there is a quid pro quo relationship between the non-party 1 and the above non-party 2's exercising the stock option profit acquired by the non-party 1 and the non-party 2, as a result of a certain correlation or economic rationality with the labor that the non-party 1 and the above non-party 2 could be viewed as having provided to the plaintiff company. In light of related Acts and subordinate statutes and records, the above judgment of the court below is just and there is no error in the misapprehension of legal principles as to the scope

2. Regarding ground of appeal No. 2

According to the records, the above non-party 1 and 2 exercised the stock option of this case on October 29, 199, and the plaintiff company was registered with the Securities Business Association on April 11, 200, and at the time of the above exercise, the registration regulations of the Securities Business Association, which include the maximum shareholder restriction provisions, were not enacted, and there is no room for application of the regulations of the Association Brokerage Market Operation, which was enforced at the time when the plaintiff company was an unlisted corporation. Thus, the court below calculated the objective exchange value of the shares issued by the plaintiff company at the time of the exercise of the stock option of this case on September 199 and October 199, based on the transaction price of the shares issued by the plaintiff company and the stock exercise price of the officers and employees at the time of the exercise of the stock option of this case, it is just to calculate the profit from the exercise of this case. There is no error of law

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Hwang-sik (Presiding Justice)