Cho High Court Decision 201Du0575 (Law No. 15, 2012)

If it is difficult to calculate the market price, it shall be assessed in accordance with the supplementary evaluation method.

It is difficult to view that the transfer price of stocks is a price formed by a normal transaction that properly reflects the objective exchange value, and there is no evidence to deem that there was a transaction within 3 months before or after the contract for stock acquisition. Therefore, it is difficult to calculate the market price, and it is evaluated by supplementary

2012Guhap35108 Revocation of Disposition of Imposition of Gift Tax

AA

The Director of the Pacific District Office

April 2, 2013

May 9, 2013

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the Plaintiff

The Defendant’s disposition of imposition of KRW 000 on May 10, 2006 against the Plaintiff on November 15, 2010 shall be revoked.

1. Details of the disposition;

A. BB Construction Co., Ltd (hereinafter referred to as 'B Construction Co., Ltd') is an unlisted corporation established on January 4, 2001 for the purpose of housing construction, etc.

B. On May 10, 2006, the Plaintiff acquired 000 won per share (hereinafter referred to as the “acquisition of the instant shares”) of Nonparty Company’s 34,000 shares (20% of the total number of shares issued (170,000 shares issued by Nonparty Company) and hereinafter referred to as “the instant shares”).

C. The defendant considered that the acquisition of the shares of this case falls under the case where it is difficult to calculate the market price at the time of acquisition, and determined and notified the amount of KRW 60 and 63 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8139 of Dec. 30, 2006, hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") and the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 19899 of Feb. 28, 2007, hereinafter referred to as the "former Enforcement Decree of the Inheritance Tax and Gift Tax Act") to conduct a reinvestigation on Nov. 15, 2010 on the ground that the transfer of shares of this case constitutes a case where the transfer of property at a price substantially lower than the market price under Article 35(2) of the former Inheritance Tax and Gift Tax Act without justifiable grounds, and the plaintiff made a request for a judgment to the Tax Tribunal for a new trial on May 21, 2010.

E. The Defendant re-audited according to the above re-audit decision, and completed the investigation as deemed reasonable, and notified the Plaintiff of this fact on July 19, 2012.

[Based on recognition] The descriptions of Gap, Eul, Eul, Eul, Eul, and Eul, and Eul, and the whole purport of the arguments

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff and KimCC agreed to provide real estate owned by the Plaintiff as collateral and transfer 34,000 shares of the stocks owned by KimCCC to the Plaintiff at face value in return for providing business funds. As such, in light of the sound social norms and transaction practices, the Plaintiff’s act of acquiring the shares of this case at face value when considering the uncertain circumstances as to the success of the reconstruction project of the non-party company, the Plaintiff’s act of acquiring the shares of this case at face value constitutes a normal transaction with economic rationality, and the instant disposition based on the premise that the acquisition of shares of this case falls under a case where the non-specially related person as provided by Article 35(2) of the former Inheritance Tax and Gift Tax Act and the acquisition of the shares of this case falls under a case where the non-specially related person acquires the shares of this case at a very low price without justifiable grounds.

(b) The light related age;

The entries in the attached Table-related statutes are as follows.

C. Facts of recognition

1) On August 21, 2001, the non-party company moved its head office from 00,000 OOO-dong, 000 O-building in Mapo-si in Mapo-si (after this, the non-party company moved its head office again on December 19, 2008) and registered the resignation of directors and representative directors of Dopo-dong 0000 on the same day, and thereafter on September 26, 2002, the resignation registration of directors and representative directors of Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si, Mapo-si was completed on March 25, 2005, and on December 20, 2008.

2) Around August 2002, the non-party company ordered several reconstruction works, such as ordering the reconstruction works for the non-party company to undertake the reconstruction works for the non-party apartment.

3) The current status of shareholders of the non-party company before and after the acquisition of the instant shares is as follows.

(Omission of Current Status of Stockholders)

4) From February 28, 2006 to September 21, 2007, the Plaintiff and the Plaintiff’s spouse provided the real estate owned by Nonparty Company as collateral in obtaining a loan from a financial institution four times in total (a total of KRW 000).

5) The details of assets and profits and losses from the incorporation of the non-party company until 2011 are as follows.

(Omission of Details of Profit and Loss)

6) Meanwhile, the Agreement dated February 14, 2005 (hereinafter “instant Agreement”) signed between the Plaintiff and KimCCC contains the following contents:

[Based on recognition] The whole purport of Gap 4, 5, 6, 8, 3, and 4, and 4

D. Determination

1) Relevant legal principles

Article 35(2) of the former Inheritance Tax and Gift Tax Act provides that where property is acquired or transferred between persons other than those having a special relationship without justifiable grounds, an amount equivalent to the difference between the consideration and the market price shall be presumed as having been donated to such person as the value of property donated to the person who has acquired profits as prescribed by the Presidential Decree. According to Article 60(2) of the former Inheritance Tax and Gift Tax Act, where a transaction is conducted freely between many and unspecified persons, and where an objective exchange price formed by a normal transaction is established, the transaction price shall not be deemed as formed by a normal transaction, and even if the transaction price is the object of non-listed stocks, it shall be deemed difficult to calculate the market price (see, e.g., Supreme Court Decision 2004Du2271, May 13, 2004). In this case, it is reasonable to determine whether the transaction price is formed by the normal exchange price and the market price under Article 60(2) of the former Inheritance Tax and Gift Tax Act and Article 60(3) of the former Inheritance Tax and Gift Tax Act.

2) In full view of the following circumstances as to the instant case’s facts and the purport of the entire arguments as seen earlier, the Plaintiff acquired the instant shares at a price considerably lower than the market price without justifiable grounds in light of transaction practices, and the instant disposition premised on this is lawful, and the Plaintiff’s assertion to the different purport is without merit.

(A) As stipulated in the instant agreement, the Plaintiff asserted that the instant shares were acquired as face value in return for providing its own real estate as collateral, but the instant agreement states that the location of the non-party company was 00 OO-dong 0000,000, and the non-party company transferred its head office on December 19, 2008 to the above location, and the Plaintiff asserted that the headquarters was mination of the instant agreement, and on February 14, 2005, the non-party company’s head office was 00 O-dong 000,000 O-dong 00, and it is difficult to believe that the instant agreement was made retroactively (the Plaintiff’s representative director provided its real estate as collateral to borrow funds for the non-party company’s business after the office of the representative director of the non-party company), and that it was difficult to view that the Plaintiff did not have any loss upon the offering of real estate as collateral and that it did not have any objective net asset value at the time of transfer by the non-party company as collateral.

C) It is difficult to see that the transfer price of the instant shares is the price formed by a normal transaction that properly reflects the objective exchange value, and unlike other materials to see that there was a sale, appraisal, expropriation, auction, or public sale within 3 months before and after the contract for the acquisition of the instant shares. Therefore, the instant shares fall under a case where it is difficult to calculate the market price, and thus, should be assessed by a supplementary assessment method under Article 63 of

D) The Plaintiff asserts to the effect that the business performance of the non-party company at the time of the acquisition of the instant shares was clearly improved and that the success of the reconstruction business was uncertain, and thus, the market price of the instant shares was reduced. However, at the time of the acquisition of the instant shares, the net assets of the non-party company have increased more than six times compared to the time of the establishment, and sales have increased more than five times, etc., and there are no data suggesting that the financial situation was good, and otherwise, the financial situation has deteriorated.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.