Whether the imposition of cash donation tax is legitimate

If a person who had a reasonable re-employment with a certain occupation at the time of the acquisition of property and had a reasonable income therefrom, it cannot be deemed that a donation was made by another person even if the funds required to acquire such property are not presented daily.

Article 45 of the Inheritance Tax and Gift Tax Act: Estimated donation of funds for acquiring property

1. The defendant's disposition of imposing gift tax of KRW 136,197,210 against the plaintiff on June 15, 2005 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Circumstances of the imposition disposition;

A. The Plaintiff is a person who engages in a credit business under the trade name of “○○○○○○○○○○○○○○○○○○○○○○○○○○ 811.”

B. On June 15, 2005, the Defendant: (a) on July 21, 2003, purchased 96,660,000 won from ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○, and paid 627,91,000 won as down payment and intermediate payment (hereinafter “sale price of this case”); and (b) on the basis that the Plaintiff received 1/2 donations from ○○○○ and ○○○○○○○○○○○○○○○○○○○○○○○○, the Defendant determined and notified gift tax as indicated in the following table (hereinafter “each disposition of this case”).

donor

Date of donation

Value of donation

Notice Tax Amount

○ ○

July 21, 2003

174,415,500 won

2,144,260 won

March 15, 2004

87,247,500 won

2,004,480 won

September 21, 2004

52,332,500 won

13,267,720 won

Sub-committees

313,995,500 won

67,416,460 won

○ ○

October 14, 2003

174,415,500 won

3,490,160 won

March 15, 2004

87,247,500 won

2,017,480 won

September 21, 2004

52,332,500 won

13,273,110 won

Sub-committees

313,995,500 won

68,780,750 won

Total

627,991,00 won

136,197,210 won

C. The Plaintiff, who was dissatisfied with each of the instant dispositions, filed a national tax appeal on September 14, 2005, but was dismissed on September 6, 2006.

Facts without dispute over the basis of recognition, Gap evidence 1, Gap evidence 3-1 to 6, Gap evidence 4, Eul evidence 1-1 to 8, Eul evidence 2-1 to 6, and the purport of the whole pleadings.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

The sales price of the instant case is only funds raised by the Plaintiff as the labor and business income generated by the Plaintiff’s work at the workplace or operating a business entity for a period of 20 years, but does not have been donated by ○○ and ○○○. However, each of the instant dispositions is unlawful.

(b) Related statutes;

Article 45 of the Inheritance Tax and Gift Tax Act: Presumption of Donation of Property Acquisition Funds

(1) Where it is difficult to recognize that a person acquired the relevant property by his/her own means in view of his/her occupation, age, income, property status, etc., as prescribed by Presidential Decree, the acquisition fund of the relevant property shall be presumed to have been donated to the person who acquired the relevant property at the time

(2) Where it is difficult to recognize that a debtor has repaid (including partial repayment; hereafter in this paragraph, the same shall apply) his/her debts by his/her own means in view of his/her occupation, age, income, property status, etc., as prescribed by Presidential Decree, the relevant repayment fund shall be presumed to have been donated to the relevant debtor at the

(3) The provisions of paragraphs (1) and (2) shall not apply to cases where the relevant acquisition fund or repayment fund falls below the amount prescribed by the Presidential Decree in consideration of occupation, age, income, property status, etc. and where there exists a sufficient vindication on the source of the relevant acquisition fund or repayment fund.

Article 34 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act: Presumption of Donation of Property Acquisition Funds

(1) The term “cases as prescribed by the Presidential Decree” in Article 45 (1) and (2) of the Act means cases where the sum of the amounts evidenced by the following provisions falls short of the value of the acquired property or the amount of the repayment of debts: Provided, That this shall not include cases where the amount not attested falls short of the smaller of the value of the acquired property or the amount equivalent to 20/100

1. The amount of income which has been reported or received the taxation (including the cases of non-taxation or reduction or exemption; hereafter the same shall apply in this Article);

2. The value of inherited or donated property which has been reported or received a taxation;

3. The amount of money or liabilities received in return for the disposal of the properties, and used directly for the acquisition of the properties or the redemption of such obligations;

(2) The term “amount prescribed by the Presidential Decree” in Article 45 (3) of the Act means the amount determined by the Commissioner of the National Tax Service in consideration of the age, household, occupation, property status, social and economic status, etc., in which the total amount of the funds for acquiring the relevant property or the funds for repayment of debts is not less than 30

(c) Fact of recognition;

(1) According to the computerized data of the National Tax Service, the details of the income reported by the Plaintiff are as listed below.

Year

Classification of Income

Income-generating Place

Amount of income;

Trade Name

Representative

1983

Wage and salary income

○○○○

○ ○

1,800,000 won

1984

800,000 won

1985

2,400,000 won

1987

Business Income:

Tax Exemption

191,000 won

Wage and salary income

○○○○

○ ○

2,250,000 won

1988

Business Income:

Tax Exemption

1,459,00 won

1989

1,847,00 won

1990

Wage and salary income

○○○○○

○ ○

6,000,000 won

1991

8,000,000 won

1992

Wage and salary income

( principal)○○○○

○○○○○○

○ ○

6,750,000 won

1993

6,000,000 won

1994

20,269,00 won

195

Business Income:

○○○○○○

24,417,00 won

196

92,818,00 won

Sub-committees

175,001,000 won

2003

Business Income:

○○○○○

9,816,00 won

204

○○○○○

1,252,072,00 won

(2) On July 21, 2003, the Plaintiff purchased the instant real estate in KRW 996,660,00 from ○○○○○○○○, and paid KRW 199,332,00 as down payment. On October 14, 2003, the Plaintiff paid KRW 149,49,00 as the first intermediate payment, and KRW 17,497,00 as the second intermediate payment on January 15, 2004, KRW 156,98,00 as the third intermediate payment on March 15, 200, KRW 104,665,00 as the fourth intermediate payment on September 21, 2004, and KRW 627,90,000 as the first intermediate payment.

(3) ○○○ acquired the instant real estate in its name under the name of heading 208, 209, 212, 110, 111, 112, 113, 114, 115, and 116 of the commercial building in which the instant real estate is located. This ○○ and ○○○ acquired each title of heading 207 and 211. The ○○ and ○○○ acquired the instant real estate in its name. The ○○ and ○○○ was the husband of the birth of ○○○, and the Plaintiff is the ○○○○’s Cho○.

(4) From October 26, 2004 to May 12, 2005, the director of the regional tax office of ○○○○ and ○○○○○ engaged in a monetary credit business on the following grounds: (a) while conducting a tax investigation with respect to the said lending company (hereinafter referred to as the “six lending companies”), there was money transaction between the said lending company and ○○ and ○○○ and ○○○; (b) the six operating entities did not have the ability to engage in a monetary credit business; and (c) said that the said ○○ and ○○ engaged in a monetary credit business on the grounds that the said six business entities did not have the ability to engage in a monetary credit business; and (d) said six companies calculated interest income based on the notarized materials at the office of the notary public at the time of monetary loan, and notified the head of the tax office of ○○ by calculating the income amount of ○○ and ○○ by means

Name of a business entity

Holder of the registered title;

Business Registration Date

Location

(Business registration number)

○

Han ○

January 6, 2003

○○ ○○○○ ○○ ○○

(○○-○-○-○○○)

○○○○ 901

○○○○

OO

June 14, 2004

The same ○○○ building

(○○-○-○-○○○)

106 No. 1106

○○○○

00

June 14, 2004

The same ○○○ building

(○○-○-○-○○○)

○○○○

Park ○

January 10, 2003

The same ○○○ building

(○○-○-○-○○○)

502

○○○○○

January 3, 2003

○○○○○○○○○○

(○○-○-○-○○○)

811

○○○○

○ ○

January 2, 2003

The same ○○○ building 822

(○○-○-○-○○○)

(5) On April 28, 2005, the head of ○○○ Tax Office imposed the global income tax and the resident tax to be imposed on ○○ and ○○○ upon the aforementioned notice from 2001 to 2004.

(6) On June 15, 2005, the director of the regional tax office of ○○○ and the director of the regional tax office notified the Defendant of the status of tax determination that the sale price of the instant case was donated by the Plaintiff ○○ and ○○○○. Based on such notification, the Defendant issued each of the instant dispositions on the basis of the notification.

(7) As seen earlier, the director of the regional tax office of ○○○○ filed an accusation with the Central District Public Prosecutor’s Office of ○○○○○, on October 26, 2004 to May 12, 2005, on the charge of tax evasion, on the charge of the tax evasion, on the charge of the tax evasion, on the charge of the tax evasion, on the charge of the Plaintiff, the title holder of the six companies, on the part of the Plaintiff, on the part of the Plaintiff, the title holder of the six companies, on the tax evasion, and on the charge of aiding and abetting the tax evasion by the ○○○○○, and on the charge of aiding and abetting the tax evasion by the ○○○○.

(8) However, the ○○ Central District Prosecutors’ Office: (a) deemed that the six registered titleholders of the six businesses were not simply aiding and abetting the evasion of tax; (b) instead of merely aiding and abetting the evasion of tax; and (c) on December 29, 2005, the Plaintiff, a registered titleholder of the six businesses, was prosecuted for the violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) against the instant ○○○○○ and the instant ○○○ and the instant ○○. According to the foregoing indictment, the Plaintiff did not properly evade the comprehensive income tax amounting to KRW 3,764,841,00 from 201 to 2004; (c) but then, (d) pursuant to the modified indictment, the Plaintiff’s actual global income amount was not reported to KRW 3,764,841,00 for the year 200 to 301, 2005, 2005, 3075, 2001.

(9) In addition, in the process of the above investigation, ○○ extended KRW 50 million to the Plaintiff, E-○, and Park ○○ (hereinafter “three persons, including the Plaintiff”) in 2001, and received interest of KRW 54 billion in total. around 2002, ○○ loaned KRW 50 million to three persons, including the Plaintiff, etc., and received KRW 180 million in total and KRW 60 million in total. From around 2003, ○○ borrowed KRW 1 billion to the Plaintiff, E-○, E-○, and Park ○○, and KRW 50 million in total, KRW 264 billion in total, and KRW 50 million in total, and around 2004, KRW 96 billion in total, and KRW 90 million in total.

(10) On June 13, 2006, the Plaintiff reported and paid the aggregate amount of penalty tax as it is, and on July 21, 2006, the ○○ Central District Court convicted all the six registered titleholders including the Plaintiff and sentenced to a fine (○○○○○○○○○○○○○○○○), and the judgment became final and conclusive. The Plaintiff paid a fine of KRW 750 million, which was sentenced to the Plaintiff.

(11) ○○○ and ○○○○ filed a lawsuit against the head of ○○○ Tax Office and the head of ○○○○ Administrative Court on the grounds that ○○○ and ○○○○○○○○○○ cannot be deemed an actual business operator of 6 enterprises on November 23, 2006, on the grounds that ○○○ and ○○○ cannot be deemed an actual business operator of 6 enterprises, and filed an appeal against ○○○ and ○○○○○○○○ Office, and the head of ○○○○○ Office and ○○○○○○○○ Office and the head of ○○○○○ Office, which appealed against ○○○○○○ and ○○○○○○ Office, but the said judgment became final and conclusive (○○○○○○) and the said judgment.

There is no dispute over the basis of recognition, Gap evidence 1, Eul evidence 2-1 through 6, Eul evidence 5-1, 2, Eul evidence 1-6-1 through 3, Gap evidence 7 through 10, 2, Gap evidence 11-1 through 5, Gap evidence 12, Gap evidence 15-1 through 3, Gap evidence 17, Gap evidence 18-1 through 3, Eul evidence 19-1 through 4, Eul evidence 19-1 through 4, Eul evidence 1-3, Eul evidence 6, Eul evidence 7-1 and 2, the purport of the whole pleadings, and the purport of the whole arguments.

D. Determination

(1) As a matter of principle, the fact of donation of property, which is a requirement for the imposition of gift tax, is a matter of proof by the tax authority. If a person has a certain occupation and a considerable amount of income at the time of acquisition of property, or a person who actually had a substantial income therefrom, barring any special circumstance, the portion of the fund for acquisition of the property, which was not presented clearly cannot be deemed to have been donated to another person, barring any special circumstance (see, e.g., Supreme Court Decision 2003Du10732, Apr. 16, 2004)

(2) Examining the instant case in light of the following: (a) 11 bonds out of the stores where the instant real estate is located are owned by ○○○ and ○○○○○○○; (b) 2111 are owned by the Plaintiff; (c) ○○○○○ and ○○○○○○○○○; (d) the Plaintiff was a kys of Cho○○○; (c) the computerized data of the National Tax Service was merely KRW 184,817,000 from the year 1983 to the year 2003; and (c) part of the amount paid by the Plaintiff as down payment was the funds of ○○○○, etc., it was found that the Plaintiff was not an actual business entity of 6 ○○○○○○○○○○ and ○○○○○○○○○○○; (c) it was difficult to readily conclude that the Plaintiff received donations from 00,000 won to 201, 3075,20757.

3. Conclusion

Therefore, each disposition of this case is unlawful, and the plaintiff's claim seeking its revocation is reasonable, so it is decided as per Disposition by admitting it.