The meaning of "property actually inherited by the spouse" under Article 11 (1) 1 (b) of the former Inheritance Tax Act;

Considering the legislative purport of the provision on the spouse's deduction, the order of the spouse's deduction in the process of calculating the tax base of inheritance, it is reasonable to view that the "property" in the main sentence of Article 11 (1) 1 (b) of the former Inheritance Tax Act (amended by Act No. 5193 of Dec. 30, 196) means not only the "property" in Articles 2, 3, 4, 7, and 9 of the same Act or the "property" in the same meaning corresponding to the "property actually inherited" which is a small property under Articles 4 and 9 of the same Act, but also the "net property divided by the inherited property" in the "property" means the "property actually inherited by the spouse". It is also a result of such interpretation that the spouse bears the obligation by the division of the inherited property that is actually submitted by the spouse for calculating the inherited property.

Articles 2 (see current Article 1 of the Inheritance Tax and Gift Tax Act), 3 (see current Article 5 of the Inheritance Tax and Gift Tax Act), 4 (see current Articles 13 and 14 of the Inheritance Tax and Gift Tax Act), 7 (see current Article 8 of the Inheritance Tax and Gift Tax Act), 9 (see current Article 60 of the Inheritance Tax and Gift Tax Act), and 11 (1) 1 (b) of the former Inheritance Tax and Gift Tax Act (see current Article 19 (1) of the Inheritance Tax and Gift Tax Act).

Plaintiff 1 and two others (Attorney Cho Jae-sik, Counsel for the plaintiff-appellant)

Head of the Pakistan Tax Office

Seoul High Court Decision 98Nu9921 delivered on January 27, 1999

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

Article 2(1) of the former Inheritance Tax Act (amended by Act No. 5193, Dec. 30, 1996; hereinafter referred to as the "Act") provides that where an ancestor has an address in Korea, the inheritance tax shall be imposed on the whole of the inherited property if the ancestor has an address in Korea (Article 2(1)). Article 4(1) of the former Inheritance Tax Act provides that the amount of inheritance tax shall be calculated by deducting the debts, etc. from the value of the inherited property, etc. (Article 5), basic deduction (Article 5), personal deduction (Article 11), etc. shall be made as the tax base of the inheritance

With respect to a certain property that a spouse has received as a share of property in consideration of the spouse’s contribution to the formation of the property, the law recognizes the spouse’s deduction as personal deductions to promote the stabilization of the spouse’s livelihood by reserving the taxation until the spouse’s death. Before the amendment by Act No. 4805 of Dec. 22, 1994, Article 11(1)1 of the Act provides that the total amount of KRW 100 million shall be deducted from the taxable value of the property (Article 11(1)1 of the Act), but Article 11(1)1 and (2) of the Act, which applies to this case, is amended by Act No. 4805, and Article 11(1)1 and (2) of the Act, which applies to this case, provides that the spouse shall be entitled to deduct the reported amount from the taxable value of the inherited property if the spouse’s return on the value of the inherited property is made by division pursuant to the provisions of Article 20 of the Act (the main sentence of this Act).

Considering the legislative purport of the provision on the deduction of spouse, the order of the spouse's deduction in the process of calculating the tax base of inheritance, 'property' in the main sentence of Article 11 (1) 1 (b) of the Act is not limited to 'property' or 'property' in the same meaning as 'property' in Article 2, 3, 4, 7, and 9 of the Act corresponding to the 'debt', which is a small property under Articles 4, 9 of the Act, but 'property' or 'property'. It is reasonable to see that 'affirmative property' or 'net property divided into 'property' means the 'net property divided into 'property'. It is also a result of such interpretation that the spouse's entry of obligation, etc. by the division of the inherited property submitted by the spouse for the calculation of inherited property in fact.

The judgment of the court below to the same purport is just, and there is no error in violation of the principle of no taxation without law or strict interpretation of tax laws as otherwise alleged in the ground of appeal.

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

Justices Lee Yong-woo (Presiding Justice)