(a) Whether it is necessary to prepare a report on impossibility of compulsory execution, etc. in handling any bad debt provided for in Article 21 subparag. 1 and subparag. 2 of the Enforcement Decree of the Corporate Tax Act

(b) Whether legal extinction of a claim is required to dispose of a bad debt of a claim, the accounting of which is obvious (negative);

A. Bad debts to be included in deductible expenses pursuant to Article 21 subparag. 1 or 2 of the Enforcement Decree of the Corporate Tax Act are sufficient if the facts satisfying the requirements for bad debts objectively revealed, and it is not necessary to keep the required documents, such as a protocol of non-performance of compulsory execution on the ground of the court’s non-property,

B. In the case of claims, such as credit sales, if an accounting awareness that the failure to recover was clearly caused by bad debt, can be included in deductible expenses in the business year concerned, and it does not require that the claim does not exist legally even after the lapse of extinctive prescription for the claim in order to dispose of bad debt.

Article 9(3) of the Corporate Tax Act, Article 21 of the Enforcement Decree of the Corporate Tax Act

A. Supreme Court Decision 88Nu3123 delivered on March 13, 1990 (Gong1990, 906)

Substitute Stock Company

Head of the Pakistan Tax Office

Seoul High Court Decision 89Gu9175 delivered on February 28, 1990

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below, based on macroficial evidence, accepted 10,00 won as 29,688,829 won as 30,000 won for non-party 1 corporation during 1986, and delayed the payment of the bill in order to secure the performance thereof, the court below did not accept 19,70,000 won as 7,000 won for promissory notes which were notarized by compulsory execution without any objection, and 10,000 won for each due date, 30,000 won as 10,000 won for 19,70,000 won as 19,00 won for which the above company had received a large amount of debt and 19,70,000 won for the above company's remaining 9,70,000 won for the above company's remaining 19,70,000 won for the above company's remaining 19,707,000 won for the above company's remaining 1.

In addition, the bad debt included in deductible expenses pursuant to Article 21 subparagraph 1 or 2 of the Enforcement Decree of the Corporate Tax Act is sufficient if it is objectively revealed that it satisfies the requirements for such bad debt, and it does not require any required documents such as a court's protocol of impossibility of compulsory execution (see Supreme Court Decision 88Nu3123, Mar. 13, 1990). In addition, if it is known that in the case of credit receivables such as credit account, if it is clearly impossible to collect it, it can be included in deductible expenses in the business year concerned, and it does not require that the claim will not exist legally after the lapse of the extinctive prescription period for the claim in order to dispose of bad debt. Therefore, there is no error of law in the misapprehension of legal principles as pointed out in the lawsuit theory in the judgment of the court.

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

Justices Lee Jong-soo (Presiding Justice) Lee Chang-soo Kim Jong-won