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Case Number of the previous trial
The early appellate court 2015 middle 0474
Title
Evaluation by supplementary evaluation method is legitimate because the market price cannot be recognized.
Summary
It is legitimate to evaluate stocks in the supplementary evaluation method stipulated by the Enforcement Decree of the Inheritance Tax and Gift Tax Act, since the example of business example is the transaction between related parties, and it cannot be seen as the objective exchange price, and there is no other data to recognize the objective exchange price.
Related statutes
Article 60 of the Inheritance Tax and Gift Tax Act: Principles of Appraisal under Article 49 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act
Cases
2015Guhap65248 Revocation of Disposition of Levying Inheritance Tax
Plaintiff
Gangwon A
Defendant
BB Director of the Tax Office
Conclusion of Pleadings
December 16, 2015
Imposition of Judgment
February 17, 2016
Text
1. The plaintiff's claim is dismissed.
2. The costs of lawsuit shall be borne by the Plaintiff.
Cheong-gu Office
The Defendant’s disposition of imposing inheritance tax of KRW 525,769,590 against the Plaintiff on April 1, 2014 is revoked.
Reasons
1. Details of the disposition;
A. The decedent KimCC (hereinafter referred to as “the decedent”) died on August 17, 2012, and the Plaintiff, the person whose spouse was the Plaintiff, Kim○, and Kim○○ received from the decedent the inheritance of the non-listed shares 304,790 shares issued by the Korea DDR (hereinafter referred to as “instant company”) and real estate.
B. On February 28, 2013, the Plaintiff and the remaining inheritors calculated the value per share of the instant shares to the Defendant as KRW 6,153, which was transacted among other shareholders within six months before and after the date the inheritance commences, and reported and paid inheritance tax.
C. After conducting an inheritance tax investigation with respect to the Plaintiff from August 31, 2013 to October 11, 2013, the Central Regional Tax Office confirmed that the value per share of the instant shares should be assessed as 12,453 won according to the supplementary assessment methods stipulated in the former Inheritance Tax and Gift Tax Act (Amended by Act No. 11609, Jan. 1, 2013; hereinafter the same shall apply), and notified the Defendant of the said assessment data. Accordingly, on April 1, 2014, the Defendant decided and notified the Plaintiff of the inheritance tax of KRW 525,769,590 (including additional tax) (hereinafter referred to as the “instant disposition”).
D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on March 2015.
13. The decision of dismissal was made. The fact that no dispute exists with respect to recognition, Gap evidence Nos. 1 and 2, Eul evidence Nos. 1 and 2, and the purport of all pleadings;
2. Whether the instant disposition is lawful
A. The plaintiff's assertion
The form of stock transaction of the company of this case is the shareholders who intend to transfer shares of the company of this case.
From the perspective of the purchase price of the shares as stipulated in the articles of incorporation, the shares were sold at the same price for the existing shareholders or new members or traded among the shareholders according to the above price. The substantial part of this case was a transaction with employees who are not specially related persons; the purchase price was determined by the articles of incorporation due to the unique characteristics of the establishment and operation of the company of this case; however, the above price was formed through free and normal transaction between the parties to the transaction; and the price per share assessed by the defendant according to the supplementary method is considerably high compared to the share price of the other listed companies of the same type of business; and the price per share assessed by the defendant according to the supplementary method is considerably higher than the share price of the other listed companies of the same type of business. Thus, the disposition of this case was unlawful.
(b) Related statutes;
It is as shown in the attached Form.
(c) Fact of recognition;
1) From October 17, 2001 to June 18, 201, the decedent retired from office as the representative director of the instant company. After that, the decedent was in office as other part-time directors of the instant company and died on August 17, 2012. The decedent owned 304,790 shares of the instant company (15.23%) out of 2,000,000 shares as of the commencement date of inheritance.
2) The instant company is a company established for the purpose of improving and repairing power generation facilities and maintaining inspections, etc. around June 199, and the employees retired from the restructuring of the former EEEEE Co., Ltd. (former EEEEE Co.) were established in the form of a company.
3) At the time of the incorporation of the instant company, all shareholders were comprised of executives and employees of the said company. The shareholders of the instant company stipulated in the articles of incorporation that they shall obtain approval from the board of directors for the transfer of shares issued by the company pursuant to Article 335 of the Commercial Act in order to prevent specific persons from controlling the company or acquiring shares by outside persons. The articles of incorporation of the instant company stipulates that the purchase price shall be calculated by dividing the net asset value of the financial statements of the immediately preceding year by the total number of issued shares
4) After the establishment of the instant company, the instant company calculated the purchase price of shares and disclosed them through internal notice in accordance with the articles of incorporation and the net asset value assessment regulations after the closing of the general shareholders’ meeting and the settlement of accounts becomes final and conclusive. The stock transaction of the instant company within the pertinent year was conducted at the same price. The details of transactions, trade unit price, etc. for
Year
Details of transactions (cases)
Trading unit cost (won)
Total amount of stock trading (case)
The total number of outstanding shares of all
200
7
1,000
13,090
140,000
201
10
1,454
28,180
600,000
202
74
1,919
437,426
600,000
2003
63
1,469
312,551
1,000,000
204
19
1,750
9,190
1,000,000
205
16
2,167
10,864
1,000,000
206
26
2,562
148,409
1,000,000
2007
8
2,630
30,340
1,000,000
208
34
3,217
79,180
1,000,000
209
54
2,923
193,654
1,500,000
2010
2
2,726
7,400
2,000,000
2011
82
4,395
299,660
2,000,000
2012
95
6,153
47,409
2,000,000
5) The details of stock transactions of the instant company conducted in 2012 are as follows:
Date of transaction
Transferors
transferee and transferee
Note Number of States
Price
April 10, 2012
이〇〇
Company of this case
108,242
6,153
April 10, 2012
안〇〇
Company of this case
1,533
6,153
April 10, 2012
박〇〇
Company of this case
8,000
6,153
May 4, 2012
오〇〇
Company of this case
20,340
6,153
May 4, 2012
나〇〇
Company of this case
13,33
6,153
May 4, 2012
나〇〇
Company of this case
800
6,153
May 4, 2012
서〇〇
Company of this case
3,000
6,153
May 4, 2012
손〇〇
Company of this case
5,000
6,153
June 28, 2012
김〇〇
Company of this case
10,600
6,153
June 28, 2012
장〇
Company of this case
2,667
6,153
June 28, 2012
홍〇〇
김〇〇
3,067
6,153
June 28, 2012
김〇〇
Company of this case
21,475
6,153
August 28, 2012
이〇〇
Company of this case
3,579
6,153
September 3, 2012
Company of this case
김〇〇외 41
80,937
6,153
October 4, 2012
이〇〇
Company of this case
23,602
6,153
November 6, 2012
Company of this case
박〇〇외 9
79,311
6,153
December 3, 2012
Company of this case
류〇〇외 28
61,923
6,153
6) The revenue amount of the instant company shall be KRW 2.9 billion in 1999, KRW 8.9 billion in 200, KRW 12.1 billion in 2001.
After the continuous increase of source, etc., in 2012, the amount of revenue has been KRW 33.5 billion, and according to the statement of disposal of earned surplus in 2012, the surplus of un disposed profits has reached KRW 13.9 billion even after the amount of cash dividends has been paid to KRW 1.0 billion.
7) At the time of incorporation of the instant company, the decedent only 36,940 shares of the instant company (9.24%)
소유하였으나 이 사건 회사를 퇴임하기 직전인 2010. 12. 31.에는 이 사건 회사 주식의 21.74%인 434,720주를 보유하게 되었고, 그 외 이 사건 회사 주식 중 20.47%는 감사인 이〇○이, 13.41%는 이사 류〇○이 각 보유하여 이 사건 회사 주식의 55.62%는 이 사건 회사의 임원들이 소유하고 있었다.
Each entry of evidence Nos. 3 through 10, 13, witness scam, part of the testimony of the witness scam and the purport of the whole pleadings.
D. Determination
1) Article 60(1) and (3) of the former Inheritance Tax and Gift Tax Act provides that the value of the inherited property as of the commencement date of inheritance.
Article 61 through 65 of the Inheritance Tax and Gift Tax Act provides that the market price shall be calculated based on the value assessed as a supplementary assessment method under Articles 61 through 65, considering the type, scale, transaction circumstances, etc. of the pertinent property. Article 60(2) of the former Inheritance Tax and Gift Tax Act provides that the market price under Article 60(1) of the former Inheritance Tax and Gift Tax Act includes the value generally recognized as being established when a transaction is made freely between many and unspecified persons, and includes the expropriation price, public sale price, appraisal price, and other matters recognized as the market price, as prescribed by Presidential Decree. The main sentence of Article 49(1)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, which is one of the items recognized as the market price, provides that "if a transaction price has been made with respect to the relevant property, such transaction price shall be excluded from cases where the transaction price is objectively deemed unfair due to the transaction with a specially related person." Therefore, even if a market price is low, the value of stocks shall not be evaluated as the market price, but it shall be determined as an objective and objective transaction price.
On the other hand, it properly reflects objective exchange values of the shares of the unlisted corporation.
If there is no example of actual transaction, and there is no appraisal value assessed in an objective and reasonable manner, the value of the relevant shares is difficult to calculate the market price. Thus, the value can be calculated by supplementary evaluation methods stipulated in Article 54 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24358, Feb. 15, 2013; hereinafter “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”) (see, e.g., Supreme Court Decision 94Nu15905, Dec. 8, 195).
2) In light of the above legal principles, the health department, the facts acknowledged as above, and the purport of the entire argument
In full view of the following circumstances, (i) the company’s articles of incorporation restrict the transfer of shares; (ii) most of the shares transaction between the company and its employees is a transaction between the company’s employees; (iii) the purchase price of shares cannot be deemed a price freely formed through a general and normal transaction as determined and publicly announced by the company in accordance with the articles of incorporation and net asset value assessment regulations; and (iv) the company’s operating income and net income have continuously increased every year, as prescribed by the articles of incorporation of the company of this case, if the net asset value of the company of this case is assessed based on the net asset value, it cannot be deemed as a general market price reflecting objective exchange value. (iv) In assessing the value of the shares of this case, the company of this case, as unlisted stocks, the Defendant cannot be deemed as a net market price reflecting objective exchange value; and (v) in assessing the value of the shares of this case, the company’s net asset value and net asset value per share are calculated based on the weighted average of 3 and 2 net asset value per share, 125 times the objective price per share value reported by the Plaintiff.
Therefore, the State of this case is a supplementary assessment method stipulated by the former Enforcement Decree of the Inheritance Tax and Gift Tax Act
Evaluation of the value per share of food is lawful, and the plaintiff's assertion is without merit.
3. Conclusion
Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.