In case where an inheritor becomes a director after having contributed an inherited property to a school juristic person, whether the inheritance tax is levied on such contributed property (negative)

According to Article 8-2(1)1 of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993), and Article 3-2(1)2 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993), public works under Article 3-2(1)2 of the former Enforcement Decree of the Inheritance Tax Act refer to public works except for those operating educational institutions under the Education Act. Thus, if an heir contributes inherited property to a business operating educational institutions, whether he/she becomes a director or participates in the appointment of directors or other business operation is not considered in determining whether the donated property is included in the taxable value of inherited property.

Article 8-2 (1) 1 and (6) of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993) (see Article 16 of the current Inheritance Tax and Gift Tax Act), Article 3-2 (1) and (13) 2 of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 14082 of Dec. 31, 1993) (see Article 13 of the current Inheritance Tax and Gift Tax Act)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jong-soo et al., Counsel for plaintiff-appellant)

The purification shop and three others (Attorneys Jeong Tae-tae et al., Counsel for the plaintiff-appellant)

The Director of the North Korean Tax Office

Gwangju High Court Decision 95Gu2486 delivered on December 22, 1996

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

The grounds of appeal are examined (to the extent of supplement in case of the supplemental appellate brief).

According to Article 8-2 (1) 1 of the former Inheritance Tax Act (amended by Act No. 4662 of Dec. 31, 1993), and Article 3-2 (1) of the Enforcement Decree of the same Act, a public-service business under Article 3-2 (13) 2 of the Enforcement Decree of the same Act under Article 8-2 (6) of the same Act refers to a public-service business except for a business operating an educational institution under the Education Act. Thus, if an heir contributes to a business operating an educational institution, whether the heir becomes a director or is involved in the appointment of a director or other business operation, is not a matter to be considered in determining whether the contributed property is included in the taxable amount of inheritance taxes.

The judgment below to the same purport is correct and there is no error in the misapprehension of legal principles as pointed out in the grounds of appeal.

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 Don-hee (Presiding Justice)