Daegu District Court-2017-Gu Partnership-20486 ( December 22, 2017)

Unlisted stocks whose issuance of stock certificates is impossible due to the progress of a lawsuit on ownership is inappropriate for management and disposition falling under the grounds for refusal of payment in kind.

Unlisted stocks in which issuance of stock certificates is impossible because of the progress of a lawsuit on the lack of ownership between shareholders, are deemed inappropriate for management and disposition and thus a disposition rejecting an application for payment in kind is justifiable.

Article 71 of the Enforcement Decree of Inheritance Tax and Gift Tax Act

Article 19-4 of the Enforcement Rule of Inheritance Tax and Gift Tax Act

2018Nu2156 Revocation of Disposition rejecting an application for payment in kind

○○ and two others

○ Head of tax office

Daegu District Court Decision 2017Guhap20486 Decided December 22, 2016

June 15, 2018

August 24, 2018

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance shall be revoked. The defendant's refusal to pay in kind to the plaintiffs on May 27, 2016 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of the judgment of the court on this case is as stated in the part of the reasoning of the judgment of the court of first instance, except for adding the judgment on the following arguments emphasized by the plaintiffs again at the trial of the court, and therefore, it is acceptable in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Additional determination

Article 71(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act and each subparagraph of Article 19(4) of the Enforcement Rule of the same Act provide that “Where it is deemed inappropriate to manage and dispose of the property for which an application for payment in kind has been filed in accordance with delegation of Article 73(2) of the Inheritance Tax and Gift Tax Act,” it cannot be deemed an exceptional provision. The Plaintiffs asserted that the disposition in this case is unlawful on the grounds that the Defendant refused the application for payment in kind by the Plaintiffs, i.e., during the litigation on the ownership of the instant shares, the issuance of share certificates is impossible because it is deemed inappropriate to manage and dispose of the property for which payment in kind has been filed.

However, in light of the fact that the payment of taxes is in principle a cash payment, and the payment in kind must take into account the equity with a person liable for tax payment in cash and the balance with tax collection, and that in the case of payment in kind, the collection of taxes is ultimately realized through realization, such as the sale of the property paid in kind, it shall be determined that an application for payment in kind for the property inappropriate for the management and disposition of such property under the proviso of Article 73(1) of the Inheritance Tax and Gift Tax Act may be rejected. "Where the management and disposition of the property is not appropriate," there may be many cases due to not only the nature of the property itself, but also the individual situation surrounding the property, and it is not feasible to only define only the case where the management and disposition is inappropriate because of the estimate of such individual situation in advance. It is reasonable to view that it is a case where the reasons under each subparagraph of Article 71(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act and each subparagraph of Article 19-4 of the Enforcement Rule of the same Act are examples

Therefore, the above argument by the plaintiffs cannot be accepted, under the premise that the above provision provides for "in a case where the management and disposition of the property is inappropriate," and further, it can be sufficiently anticipated that there is difficulty in selling the shares of this case due to the dispute over the ownership of this case at the time of the disposition of this case. Thus, the disposition of this case which did not permit the plaintiffs' application for payment in kind on the ground that the shares of this case constitute property inappropriate for the management and disposition of the shares of this case.

3. Conclusion

Therefore, the plaintiffs' claims of this case are all dismissed due to the lack of reasons, and the judgment of the court of first instance is justified, and all appeals of the plaintiffs are dismissed. It is so decided as per Disposition.