[Request Number] Trial 2018 Before 1920 ( September 19, 2018)

[C] Assignment [Type of Decision] Dispact

[Determination] A summary of the transcript of the register is that the land at issue was transferred under the name of the claimant, was invested in kind to the corporation at issue, and the claimant and the corporation at issue appear as a contracting party even under the related business transfer/acquisition contract. In light of the fact that it is difficult to recognize that such a series of contracts pertaining to the land at issue belong to the association at issue, it is difficult to accept the claim to transfer the land at issue, while

[Related Acts and subordinate statutes] Article 32 of the Restriction of Special Taxation Act

The appeal is dismissed.

1. Summary of disposition;

A. On July 27, 2012, the claimant succeeded to the rights and obligations of the right to sell the land within an OO sold by the OO, and acquired the ownership of the land in question.

B. On November 29, 2012, the claimant established an OO (hereinafter “instant corporation”) for a commercial building sales business and invested in kind the land at issue, and applied for the carried forward taxation of capital gains tax on the conversion into a corporation pursuant to Article 32 of the Restriction of Special Taxation Act on the OO of capital gains tax generated in the process.

C. After establishing a key corporation on November 29, 2012, the claimant transferred 92.26% of the shares of the key corporation owned by the claimant to the members of the OO within eight months, and resigned from the representative director on February 19, 2013, and the key corporation was voluntarily closed by the OO on November 30, 2015.

D. On October 12, 2017, the disposition authority deemed that the claimant violated the provisions on post-management (at least 50/100 of the shares issued in return for the investment in kind within five years from the date of the investment in kind) in the process of post-management of carried-over taxation, and subsequently corrected and notified the applicant of the capital gains tax OO(including additional taxes).

E. On December 11, 2017, the claimant appealed and filed an appeal on March 21, 2018.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

(1) The real owner of the pertinent land is an association member of the OO, and the bank loan (sale balance) is difficult under the name of the association, and only borrowed the name of the claimant for the smooth progress of the business. Therefore, the transfer income tax must be imposed jointly on the union members.

(2) If a representative or manager is appointed among the organizations, and if the interests are distributed among the members, the members concerned shall be deemed to operate the business jointly and thus the transfer income tax for each member must be imposed. However, the disposition agency made a disposition contrary thereto.

(b) Opinions of disposition agencies;

(1) The claimant is justified in the initial disposition imposed on the claimant who did not pay the shares received in return for the investment in kind by transferring more than 50% within five years the shares received in return for the investment in kind.

(2) The claimant lawfully succeeded to the right and duty of the land sale contract, and the partnership is dissolved and changed to OO, and the partnership is currently not liable for duty payment because its substance is unclear.

(3) The legal act of the claimant (such as land sale contract, investment in kind, establishment, and carry-over taxation) as a contractor and owner of the disputed land has been consistent, and the same act cannot be treated differently depending on the claimant's assertion or interest.

3. Hearing and determination

A. Key issue

The legitimacy of the claim that the land registered in the name of the claimant is only a simple name, and that the association members, who are the real owners, bear the tax liability.

B. Relevant statutes

(1) Framework Act on National Taxes

Article 14 (Real Taxation) (1) If the ownership of income, profit, property, act or transaction subject to taxation is merely nominal, and a person to whom such title belongs belongs exists, the tax-related Acts shall apply to such person to whom such title belongs as a taxpayer.

(2) The provisions pertaining to the calculation of tax base in tax-related Acts shall apply to the actual income, profit, property, act or transaction, regardless of its title or form.

Article 15 (Good Faith and Sincerity) Any taxpayer shall perform his/her obligations in good faith and sincerity. The same shall also apply where a tax official performs his/her duties.

(2) Restriction of Special Taxation Act

Article 32 (Carryover Taxation of Transfer Income Tax for Conversion into Corporation) (1) Where a resident makes an investment in kind in fixed assets for business or converts such fixed assets into a corporation (excluding corporations operating consumptive service business prescribed by Presidential Decree) by the method of business transfer or acquisition prescribed by Presidential Decree, he/she may be subject to carryover taxation.

(2) Paragraph (1) shall apply only where the capital of a newly incorporated corporation is at least the amount prescribed by Presidential Decree.

(3) Any resident who intends to be governed by paragraph (1) shall apply for the carryover taxation, as prescribed by Presidential Decree.

(4) Article 31 (4) through (6) shall apply mutatis mutandis to a corporation to be established pursuant to paragraph (1).

(5) Where any of the following causes occurs within five years from the registration date of incorporation of a corporation incorporated pursuant to paragraph (1), a resident subject to paragraph (1) shall pay the carried-over amount and the tax amount (referring to the amount excluding the tax amount already paid by the relevant corporation) under paragraph (1) as capital gains tax within two months from the last day of the month in which the cause occurs. In such cases, necessary matters concerning the criteria, etc

1. Where the corporation established pursuant to paragraph (1) discontinues the business succeeded from a resident to whom paragraph (1) has been applied;

2. Where the resident to whom paragraph (1) has been applied disposes of not less than 50/100 of the stocks or equity shares acquired by conversion into a corporation.

(3) Enforcement Decree of the Income Tax Act

Article 3-2 (Classification of Organizations Deemed Resident or Nonresident) The Act shall apply to organizations deemed residents or non-residents pursuant to Article 2 (3) of the Act according to the following classification:

1. Where it is confirmed that the method or ratio of distribution of profits between members has been determined or such profits have been distributed, taxation for each class member shall be held jointly to operate the business;

2. Where the method of profit distribution or the ratio of profit distribution among members is not determined or confirmed, such organization shall be deemed one resident or non-resident and taxed accordingly.

C. Facts and determination

(1) The details of the succession of rights and duties or the transfer of ownership to the land at issue are as follows:

(2) A person who intends to obtain a loan to pay the balance of the land at issue. However, a person who intends to obtain a loan under the name of the partnership succeeds to the rights and obligations to sell the land at issue through a resolution of the general meeting of the partnership because the lending of financial rights is difficult, and since there was no payment in this process, he/she is still the co-ownership of the union members and the claimant is the transfer of ownership only in the name of the company.

(3) On July 27, 2012, the claimant acquired the ownership of the key land and executed the loan by OO as collateral for the key land through B/B of the register of the register.

(4) On November 29, 2012, the claimant made an investment in kind in the key corporation, and then reported the transfer income tax scheduled as follows.

(5) The claimant, by resolution of the special meeting, resigned the representative director of the key corporation, and the OO was selected as the representative director, and the main contents of the minutes of the special meeting are as follows.

(6) The key corporation was voluntarily closed by the OO and the main contents of the agency’s ex officio closure investigation report are as follows.

(7) In full view of the facts and relevant laws and regulations, it is deemed that the disposition authority did not err in imposing capital gains tax on the claimant in relation to the investment in kind of the key land and the suspension of carried-over taxation.

(A) On July 27, 2012, the land at issue in the certified copy of the register was transferred under the name of the claimant. On November 29, 2012, the ownership was invested in kind to the key corporation, and the claimant and the key corporation under the relevant business transfer/acquisition contract are parties to the contract, and it is difficult to recognize that such a series of contracts belong to the key association.

(B) When the claimant files an application for carry-over taxation, he/she has voluntarily filed a tax declaration as the transferor of the pertinent land, i.e., the person liable for duty payment, and subsequently changed his/her position as the formal owner due to the violation of the follow-up management regulations. As long as the claimant voluntarily selected and reported the tax burden, he/she should assume the responsibility incurred thereafter, and if the taxpayer denies the form of transaction

(C) On loan convenience, the claimant merely transfers the ownership of the corporation to himself/herself, and the actual owner claims that it is the association members. However, such fact cannot be viewed as an inevitable circumstance that should only be done when violating relevant laws and regulations, such as real estate real-name system, etc., and other legal effects related to the land at issue shall vest in the claimant, and the claim of the claimant that only the transfer income tax should be distributed to the association

4. Conclusion

This case shall be decided as ordered in accordance with Articles 81 and 65 (1) 2 of the Framework Act on National Taxes because the petition for adjudication has no merit as a result of the review.