Seocho 209west 2103 (Law No. 9.17, 2009)

Whether the management and disposition of property subject to payment in kind is inappropriate;

Since there was no prospect for sale at a reasonable price, such as where the loss of value that cannot be recovered due to the fluctuation of market price was predicted at the time of filing an application for payment in kind, it shall be deemed inappropriate to manage and dispose of the property subject to payment in kind.

The contents of the decision shall be the same as attached.

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

1. Main claim;

"As of January 15, 2009 (as of January 2, 2009, the date of the disposition written by the complaint is clear that it is a clerical error) each imposition of gift tax of KRW 292,398,270 on behalf of the plaintiff and KRW 43,802,350, total amount of KRW 336,200,620, and KRW 336,200 (including additional tax) shall be revoked," and 2. Preliminary claim

The defendant's rejection disposition against the plaintiff on March 6, 2009 against payment of each gift tax shall be revoked.

1. Details of the disposition;

A. DDDB Co., Ltd., an unlisted corporation, issued 130,000 new shares by offering offering new shares with capital increase on September 7, 2005 through the shareholders allocation method. As KimA and EE, an existing shareholder of the non-party company, acquired 74,000 shares of the non-party company at KRW 5,00 per share, and renounced the remaining 56,000 shares of 56,00 shares, the Plaintiff acquired 11,20 shares out of the above forfeited shares and acquired 5,00 won per share (hereinafter referred to as “the shares acquired by the Plaintiff”).

B. According to Articles 60(3) and 63(1)1(c) of the Inheritance Tax and Gift Tax Act (amended by Act No. 8139, Dec. 30, 2006; hereinafter referred to as the “Act”), and Articles 54(1) and (2), 55, and 56(1)1(2) and (3) of the Enforcement Decree of the Act (amended by Presidential Decree No. 1933, Feb. 9, 2006; hereinafter the same), the Defendant assessed the market price per stock of the non-party company pursuant to Articles 60(1) and (2), 55, and 56(1)1(2) of the Enforcement Decree of the Act (amended by Presidential Decree No. 1933, Feb. 9, 2006; hereinafter referred to as the “Act”), the Plaintiff acquired the stocks of this case at a price lower than its market price, and calculated the profits earned by the Plaintiff as follows.

Value per share prior to the capital increase: 1,288,534 won (calculated in accordance with Articles 60 (3) and 63 (1) 1 (c) of the Act and Article 54 (1) and (2), Articles 155 and 56 (1) 1 (2) and (3) of the Enforcement Decree of the Act)

○ Total number of outstanding shares before the capital increase: 10,000 shares

○ The acceptance price per stock of new stocks: 5,000 won

The number of stocks increased by capital increase: 130,000 shares

○ Gross profit derived from the Plaintiff’s increase in its capital: 1,026,827,200 won [[[[[1,288,534 won + 10,000 won + 5,000 won + 130,000 won]]] ± (10,000 note + 130,00 won] - 5,000 won] x 11.200 note];

"The defendant imposed and notified the plaintiff on January 15, 2009 of the gift tax of KRW 292,398,270 (including additional tax) and KRW 43,802,350 (including additional tax) on the ground that the plaintiff received each gift of KRW 834,297,100 from KimA, an existing shareholder, and KRW 192,530,100 (total KRW 1,026,827,200) from E, as described in the above paragraph b (hereinafter referred to as "instant taxation"), and "d. The plaintiff requested the defendant on January 28, 2009 that he would pay the total amount of the above amount of the gift tax to the shares of this case, but the defendant rejected the plaintiff's application for the management and disposition of the above shares on February 12, 2009 (hereinafter referred to as "No. 36,14,300,000).

The purport of the whole

2. Judgment on the main claim

A. The plaintiff's assertion

The instant taxation disposition should be revoked because it is unlawful for the following reasons.

(1) The non-party company's stocks were traded in KRW 5,00 per share between KimA, NewB, and HabCC as the non-party company's game machine manufactured by the non-party company is deemed to be a speculative game product due to the implementation of the KJ on December 31, 2004 (Notice No. 2004-14 of the Ministry of Culture and Tourism No. 2004, hereinafter referred to as the "Notice of this case") and the payment of premiums was prohibited. The sales amount of the non-party company's stocks was sharply reduced since September 4, 2005. The above stock transaction is a sale of the same item as the shares of this case, and is an objective exchange value formed by normal transactions. Accordingly, the market price of the shares of this case at the time of the Plaintiff's acquisition of the shares of this case is the same amount as the above trading price of KRW 5,000 per share, but the defendant evaluated the market price of the shares of this case as a supplementary method of assessment and received a substantial benefit.

(2) Even if the market price of the instant shares is calculated by the supplementary assessment method, considering the fact that the KRW 1,419 of the instant game machine, which was an inventory asset at the end of the business year 2004, was almost not contributed to the creation of the profits of the Nonparty Company due to the enforcement of the instant public notice, etc., and the price was reduced to below the manufacturing cost, the said game machine at the time of the date of the acquisition of the instant shares, which was at the time of the acquisition of the instant shares, should be evaluated as having no value as assets or at a lower price than the rental fee. Nevertheless, the Defendant’s assessment of approximately KRW 3,096,00 per unit of the instant game machine 1,419, approximately KRW 4,397,501,58, which was assessed as the assets of the Nonparty Company at the time of the acquisition of the instant shares, and calculated the net asset value per share, and the net profits and losses for the last three years, is unlawful.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The non-party company opened a "Dnet Scot (hereinafter "the game of this case") which is a kind of screen game, and offered free gifts to the users of the game using 18 years of age or older under the Rating Classification Act on January 16, 2004, such as granting 5,00 won of gift products to the game machine users. However, as the notice of this case was implemented from March 2005, the product of this case was deemed as a speculative game and became unable to provide free gifts to the users.

(2) The non-party company disposed of 1,419 game machinery manufactured and leased in the year 2004 by selling it, omitted it from the end of 2004 inventory assets on the balance sheet for the business year 2004, and added about 4,393,223,363 won per 1 game machinery to the sales cost on the balance sheet for the business year 2004, and reported and paid corporate tax for the business year 2004.

(3) The Seoul Regional Tax Office conducted a tax investigation on the non-party company from June 21, 2005 to August 16, 2005, and discovered the above facts. The value of 1,419 game machinery omitted at the end of the business year 2004, 4,393,223,363 won was included in the gross income for the business year 2004 and adjusted the amount of income by making a reservation disposition, and then imposed and notified the non-party company of corporate tax of 1,523,610,943 on October 1, 2005.

(4) The non-party company reported and paid corporate tax for each business year from 2005 to 2007, assessed the sales and disposal portion of the game machine 1,419 assets which were not included in the calculation of earnings as above as approximately KRW 3,096,00 per 1 unit of the game machine, and reserved and disposed of as losses industry as listed below.

(5) At the time of the Plaintiff’s acceptance of the instant shares, the Defendant calculated the net profit and loss amount for the last three years of the Nonparty Company’s acquisition of the instant shares as indicated below. Based on this, the Defendant assessed the net profit and loss value per share of the Nonparty Company’s shares as KRW 1,

(6) On the basis of the balance sheet of the end of the business year 2004, the Defendant calculated the net asset value of the non-party company as of the date of acquiring the Plaintiff’s shares of this case as the following table. Based on this, the Defendant assessed the net asset value of the non-party company’s shares as KRW 553,316

(7) On the other hand, on September 4, 2005, the representative director KimA of the non-party company purchased 2.500 shares and 1,250 shares of the non-party company from NewBB, Audit and InspectionCC, each of which was 5,00 shares of the non-party company, and the new BB and PCC resigned from each of the directors and auditors on the same day.

[Ground of recognition] Evidence 8 to 11, evidence 14 to 17, and evidence 4 to 7 mentioned above

D. Determination

(1) Determination as to the Plaintiff’s assertion as stated in A. (1)

In the case of unlisted stocks not listed on the Korea Stock Exchange, if there is an example of the transaction that seems to properly reflect the objective exchange values, such price shall be deemed the market price. However, if there is no such example or it is difficult to calculate the market price by any other means, the value shall be assessed according to the supplementary evaluation methods under the Act. Here, the market price is, in principle, an objective exchange price formed through normal transactions. In order to constitute the market price at the time of donation, there must be circumstances to deem that the transaction price objectively reflects the general and normal exchange value (see Supreme Court Decision 9Du2505, Feb. 11, 2000).

In full view of the following circumstances acknowledged by the above facts and the evidence as follows: (a) transaction of stocks of the non-party company between KimA and NewB, and HaCC on September 4, 2005 between the representative director and its executives and employees was made at par value uniformly; (b) the above transaction value is considerably low compared to KRW 1,288,534, which is the value of the stocks of the non-party company calculated by the supplementary evaluation method at that time; and (c) the business year 2005, which is the time of the above transaction, and the immediately preceding 2004, the non-party company maintained good financial status, it is difficult to view the above transaction value as free and objective exchange price of the stocks of the non-party company formed by a normal transaction between many and unspecified persons; and there is no other data to recognize the market value of the stocks of the non-party company at the time of the Plaintiff’s acquisition of the stocks of this case. Thus, the market value of the stocks of this case cannot

Therefore, this part of the Plaintiff’s assertion is without merit. (2) Judgment on the Plaintiff’s assertion as stated in A. (2) is without merit.

(1) Under Article 63(1)1 (c) of the Act, which provides for the so-called supplementary evaluation method, Article 54(1) and (2), Article 55, Article 56(1)1, (2), and (3) of the Enforcement Decree of the Act, and Articles 17-2 and 17-3 of the Enforcement Rule of the Act (amended by Ordinance of the Ministry of Finance and Economy No. 505 of Apr. 25, 2006), the market value of non-listed stocks shall be appraised by adding the net value per share calculated by dividing the weighted average value of profits and losses for the latest three years by a fixed interest rate, the net asset value per share divided by three and two times the net asset value of the relevant corporation as of the evaluation base date; (3) The net asset value of the relevant corporation shall be calculated by subtracting liabilities from the value of assets appraised under the provisions of Articles 60 through 66 of the Act as at the time of the evaluation base date; and the amount of net profits and losses paid to the relevant corporation for each business year shall be subtracted or exempted from income tax;

However, if the value of the corporation's assets appraised by the above method is less than the book value (the value obtained by subtracting depreciation costs from the acquisition value), it shall be the book value if there are justifiable reasons less than the book value, and if there are such causes as prescribed by the Ordinance of the Ministry of Finance and Economy, such as the corporation's net profit and loss for the last three years due to a temporary and preferential case, the average value per share shall be calculated instead of calculating the average average amount of net profit and loss for the last three years. Thus, the fact that the asset value of the corporation is less than the book value or that the corporation's net profit and loss for the last three years is ordinarily increased due to a temporary and preferential case, the burden of proof for such special reasons belongs to the taxpayer.

(B) According to the above legal principles and the above facts of recognition, the defendant assessed the value of 1,419 game machinery as inventory assets of the non-party company at the time of the acquisition date of the plaintiff's stock of this case based on the balance sheet, profit and loss statement for the business year 2004 - the balance sheet, the corporate tax base and tax amount adjustment statement, the aggregate table of income amount adjustment, the statement of adjustment of capital and reserve funds, etc. of the non-party company's 4,393,223,363 won according to the book value, and calculated the net asset value of

(C) Meanwhile, according to the above facts, the notice of this case is likely to reduce the sales price of the company of the non-party, and accordingly, the price of the game machine, which is the inventory assets of the non-party company, was anticipated to decline. The non-party company's 4,393,223,363 won of the game machine omitted from the inventory assets at the end of the business year 2004, was included in the gross income of the non-party company in 2004, and the net profit and loss amount of the non-party company of this year has increased substantially. However, as alleged by the plaintiff, such circumstance alone does not require an evaluation of the value of the above game machine as at the date of acquisition of the stocks of this case, or that the price was low as at the time of acquisition of the stocks of this case, or that the net profit and loss amount of the non-party company for the last three years has increased normally, and there

(D) Therefore, the Plaintiff’s assertion on this part is without merit.

3. Determination on the conjunctive claim

A. The plaintiff's assertion

Although the shares of this case for which the Plaintiff applied for payment in kind are not an inappropriate property, the Defendant’s refusal to pay in kind in this case should be revoked as it is unlawful.

B. Determination

(1) According to Article 73(1) and (2) of the Act, Articles 71(1) and 74(1) of the Enforcement Decree of the Act, and Articles 19-4 and 20(1) of the Enforcement Rule of the Act, where the value of securities among donated property exceeds 1/2 of the value of the relevant property and the amount of gift tax paid exceeds 10 million won, the head of the competent district tax office may, upon the taxpayer’s application, allow payment in kind. Stocks of an unlisted corporation shall be included in the property subject to payment in kind. However, where the stocks of the unlisted corporation are the object of a security right, the stocks of the non-listed corporation shall be included in the property subject to payment in kind, or there is no prospect for sharing or transfer, or where it is deemed inappropriate to manage or dispose of the property due to specific circumstances, such as there is a limitation on the Acts and subordinate statutes or the articles of incorporation, or there is no prospect for sale (see Supreme Court Decision 9

(2) According to the overall purport of evidence Nos. 10-3, 4, 5, and Eul Nos. 11 through 14, the following facts: ① The non-party company continuously assessed the market price of the non-party company’s stocks from 2006 to 2008,117,516,151,2508,684,682,180,172,239 won, and recorded the net loss for the last three years as of the date of application for payment in kind of the stocks of this case ( January 28, 2009), and ② The accumulated loss amount for the last three years was 6,805,793,072 won as of January 31, 2009, which was the above application for payment in kind, and thus, it was difficult for the non-party company to recognize the market price of the non-party company’s stocks as 00 won as of January 31, 2009.

(3) According to the above facts, the shares of this case had no prospect for sale at a reasonable price, such as where the loss of value could not be recovered due to the fluctuation of market price was predicted at the time of application for payment in kind. Thus, it constitutes an inappropriate case for the management and disposition of the property subject to payment in kind. Thus, the plaintiff's conjunctive claim is without merit.

4. Conclusion

If so, the plaintiff's primary and conjunctive claims are without merit, all of them are dismissed.