(a) Standard time for appraising the value of donated property to be added to the value of inherited property under Article 4 (1) of the former Inheritance Tax Act (amended by Act No. 2319, Dec. 28, 1971);

(b) Net profit during the evaluation formula of unlisted stocks under Article 5 (5) 1B of the Enforcement Decree of the Inheritance Tax Act and summary of corporate tax deduction;

(c) Purpose of "amount of gift tax" in relation to donated property added to inherited property to be deducted from the amount of inheritance tax calculated under Article 18 (3) of the former Inheritance Tax Act.

(a) The value of the donated property to be added to the value of the inherited property on which an inheritance tax is to be levied under Article 4 (1) of the former Inheritance Tax Act (amended by Act No. 2319, Dec. 28, 1971) shall be appraised as of the time of commencing the inheritance;

(b) Of the valuation and inclusion of unlisted stocks under Article 5(5)1(b) of the Enforcement Decree of the Inheritance Tax Act, “net profit for the last three years per share” means only the amount of profit excluding the income that is not attributed to shareholders, such as corporate tax.

C. "Amount of gift tax" on donated property added to inherited property to be deducted from the amount of inheritance tax calculated under Article 18(3) of the former Inheritance Tax Act means an amount equivalent to the amount of gift tax calculated on the donated property at the time of donation.

Articles 2(1), 4(1), 9(1), 18(3), and 29-4 of the former Inheritance Tax Act; Articles 5(1) and 5(5) of the Enforcement Decree of the Inheritance Tax Act

Plaintiff 1 and eight others

Defendant 5 and Defendant 6 are minors, and they are legal representatives, Defendant 2 et al., Counsel for the defendant-appellant-appellee and one other.

Attorney Shin Young-chul, Counsel for the defendant-appellant-appellee

Seoul High Court Decision 76Gu33 delivered on November 1, 1977

The part of the judgment below against the defendant is reversed and that part of the case is remanded to the Seoul High Court.

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

The grounds of appeal are examined.

1. As to the grounds of appeal by the plaintiffs' attorney:

Article 2 (1) of the Inheritance Tax Act (amended by Act No. 114, Mar. 22, 1950; Act No. 2319, Dec. 28, 1971) which was enforced at the time of the commencement of the inheritance provides that where the predecessor has a domicile in Korea, all of the inherited property shall be subject to inheritance tax if the predecessor has a domicile in Korea, and Article 4 (1) of the same Act provides that the value of the inherited property shall be calculated within one year before the commencement of the inheritance and the amount calculated by deducting the amount prescribed in the same paragraph from the value of the inherited property to the heir and a person other than the heir shall be the taxable value of the inherited property subject to inheritance by applying a progressive rate according to the taxable value of the same Act (see Article 14 of the same Act). Thus, it is clear that the legislative purpose of the Act is to prevent the omission of liability for inheritance tax by donation to the prospective heir or a person other than the heir prior to the commencement of inheritance of the property subject to the inheritance tax of the future.

In addition, Article 9 (1) of the same Act provides that the value of the inherited property and the value of the inherited property to be added to the value of the inherited property shall be based on the current status at the time of the commencement of the inheritance, and Article 5 of the Enforcement Decree thereof shall be based on the market price at the time of the commencement of the inheritance. Thus, in calculating the inheritance tax, it is clear that the value of the inherited property should be evaluated as at the time of the commencement of the inheritance as well as the value of the donated property to be added to the inherited property under Article 4 (1) of the same Act, and the inheritance tax shall be calculated by deducting the value of the inherited property from the value of the inherited property under Article 4 (1) of the same Act, the amount so-called basic and family deduction under Articles 5 and 11 of the same Act, as well as the amount calculated by deducting the value of the inherited property from the value of the inherited property at the time of the commencement of the inheritance (the calculated amount of inheritance tax shall be calculated by deducting the inheritance tax amount at the time of the commencement of inheritance tax from the inheritance tax.

The first theory of lawsuit is that the inheritance tax is unreasonable in excess of the inherited property in the first case. The result is that the inheritance tax would result in the reduction of the inherited property by making a donation in advance to reduce the burden of inherited property, and that it would not be more unfavorable than the time when the predecessor did not make a living donation of property. Moreover, there is only an obligation to pay the inheritance tax (see Article 18(1) and (2) jointly with the co-inheritors or donee within the scope of the property acquired by inheritance or donation, and there is no unreasonable problem. It is not contrary to the Constitution that guarantees the property rights of the people. Furthermore, the theory that only inherited property shall be appraised at the time of the commencement of inheritance and the donated property shall be added according to the evaluation at the time of donation violates the law of Article 9 of the Act, and that the value of inherited property shall be calculated according to the current status at the time of the commencement of inheritance is unreasonable, and that it is not contradictory to the purport of Article 14 of the old Act that the Plaintiffs’ claim that the value of donated property should not be added to the value of inherited property at the time of inheritance tax is unreasonable.

2. As to the ground of appeal by Defendant’s attorney

A. Among the formula on the appraisal method for unlisted stocks as stipulated in Article 5 (5) 1(b) of the Enforcement Decree of the Inheritance Tax Act, the "net profit" of the "net profit" of the average net profit for the last three years per share means only the profit excluding the income not attributable to the shareholders, such as corporate tax, etc. (see Supreme Court Decision 77Nu101, Jul. 26, 197). Thus, the judgment of the court below which assessed the stocks with the same purport is just and there is no second argument to criticize this point from the opposing opinion.

B. As seen in the above 1, Article 18(3) of the Act provides that when adding donated property to inherited property as seen in this case, the amount of the gift tax calculated for the pertinent donated property shall be deducted from the amount of the gift tax calculated for the pertinent donated property.

If the above donated property is subject to gift tax, the gift tax is imposed or will be imposed on the future, and if the above donated property is subject to gift tax, it is not easy to say that the gift tax will not be imposed if the donated property is added to the inherited property, and thus, if the donated property is neglected without considering the gift tax as it is, it would result in imposing inheritance tax and gift tax on the same property double or imposing inheritance tax on non-taxable donated property. Therefore, in order to eliminate such unreasonable points, the above provision is established. Therefore, in the above Article 18, the amount of gift tax under the above Article is interpreted to refer to the amount equivalent to the amount of gift tax to be calculated on the assumption that it is subject to gift tax, in the case of the gift tax or non-taxable donated property. The purport of the above Article is that the gift tax is based on the value of donated property at this time (Article 29-4 of the Inheritance Tax Act, Article 29-1 of the Inheritance Tax Act). The amount of gift tax under the above Article is interpreted to refer to the amount of gift tax on the donated property at the time of gift tax at this time.

Nevertheless, according to this logic, the court below concluded that the amount of gift tax stipulated in the above law is calculated based on the value of donated property at the time of commencement of inheritance and held that it is the amount of inheritance tax to be borne by the plaintiffs. According to this logic, when there is a price increase at the time of commencement of inheritance than at the time of donation, the amount of gift tax to be imposed or imposed would be deducted from the amount of inheritance tax calculated, and in the case of price decline, it would result in contradiction that deducts the amount less than the amount of gift tax to be imposed or imposed from the amount of gift tax. Accordingly, the court below erred by misapprehending the legal principles on the amount of gift tax as seen above, and therefore, the part against the defendant among the original judgment is reversed

Therefore, it is so decided as per Disposition by the assent of all participating Justices who reviewed the appeal by dismissing the plaintiffs' appeal, and the costs of the lawsuit by the appeal shall be borne by the mobilization, and the part of the judgment below against the defendant shall be reversed and remanded.

Justices Kim Yong-chul (Presiding Justice)

Justices Kim Yong-chul's overseas business trip, thus unable to sign.