A. Where Article 55(1) of the Income Tax Act applies, the standard for calculating the transfer value (=market price)

B. Whether the maximum debt amount established regarding the transferred real estate prior to transfer can be deemed as the market price under the above "01" (negative with qualification)

(a) In cases where Article 55(1) of the Income Tax Act applies as it is deemed that the transfer of assets by a resident with transfer income is made with a juristic person with a special relationship with a resident and thus the tax burden on the transfer income is reduced unreasonably due to the transfer of assets below the market price, the transfer value shall not be calculated based on the standard market price as of the market price pursuant to Article 170(8)

B. The market price under Article 170(8) of the Enforcement Decree of the same Act refers to an objective exchange value formed through normal transactions in principle, and where it is difficult to verify the market price, the appraised value by objective and reasonable means may also be deemed the market price. However, barring special circumstances, the maximum debt amount of the right to collateral security established with respect to the relevant transferred real estate shall not be deemed the market price

Article 55 (1) of the Income Tax Act, Article 170 (8) of the Enforcement Decree of the same Act

A.B. Supreme Court Decision 88Nu11520 decided Jul. 25, 1989 (Gong1989,131) (Gong131) 91Nu2731 decided Nov. 26, 1991 (Gong1992,348) Na. Supreme Court Decision 91Nu6856 decided Nov. 24, 1992 (Gong193,288)

Plaintiff 1 and one other plaintiffs, Plaintiffs Hongk Law Firm, Attorneys Kim Jong-young et al., Counsel for the plaintiff-appellant-appellee

The director of the tax office.

Seoul High Court Decision 91Gu28469 delivered on November 4, 1992

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

In case where Article 55 (1) of the Income Tax Act applies because the transfer of assets by a resident with capital gains is deemed to have reduced unreasonably the tax burden on the capital gains tax due to the transfer of assets with a corporation in a special relationship with the resident or the transfer of assets below the market price, the transfer price shall be calculated according to the market price pursuant to Article 170 (8) of the Enforcement Decree of the same Act, not based on the standard market price (see, e.g., Supreme Court Decision 88Nu1520, Jul. 25, 1989; Supreme Court Decision 91Nu2731, Nov. 26, 1991).

In addition, the market price under the provision of the above Enforcement Decree refers to the objective exchange value formed through normal transactions in principle, and when it is difficult to verify such market price, the appraised value by objective and reasonable methods may also be deemed the market price. However, unless there are special circumstances, the maximum debt amount of the right to collateral security established with respect to the relevant transferred real estate before transferring the real estate shall not be deemed the market price as mentioned above.

Therefore, the judgment of the court below to the same purport is just and there is no error of law like theory.

There is no reason to discuss this issue.

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 Yong-ju (Presiding Justice)