[1] In a case where an ancestor bears a joint and several liability for a third party at the time of commencement of the inheritance or is liable for a surety as a surety, whether the amount of such liability can be deducted from the value of the inherited property (affirmative with qualification)

[2] The method of evaluating unlisted stocks in the evaluation of inherited property

[1] The obligation of the inheritee to be deducted from the value of inherited property pursuant to Article 4 (1) 3 of the former Inheritance Tax Act (amended by Act No. 4283 of Dec. 31, 1990) refers to the obligation of the inheritee whose obligation is recognized to be a final and conclusive obligation of the inheritee at the time of the commencement of the inheritance. Thus, in case where the inheritee bears a joint and several liability for a third party at the time of the commencement of the inheritance, or is liable as a surety, the obligor is in a state of insolvency in which the obligor is unable to perform the obligation, and if it is deemed that there is no possibility that the obligor may perform the obligation even if the obligor exercises his right to demand reimbursement against the primary obligor, the amount of such obligation may

[2] Even in the case of unlisted stocks with low market value in the evaluation of inherited property, where there are normal examples of transactions that properly reflect their objective exchange value, such transaction value shall be deemed the market value and the value of the shares shall not be assessed by the supplementary evaluation method under Article 5 (5) 1 (b) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 12993 of May 1, 190).

[1] Article 4 (1) 3 (see current Article 14 (1) 3 of the Inheritance Tax and Gift Tax Act) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990) / [2] Article 9 (see current Article 60 of the Inheritance Tax and Gift Tax Act) of the former Inheritance Tax Act (amended by Act No. 4805, Dec. 22, 1994); Article 5 (5) 1 (b) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 1293, May 1, 1990) (see current Article 54 of the Inheritance Tax and Gift Tax Act)

[1] Supreme Court Decision 88Nu4294 delivered on June 27, 1989 (Gong1989, 1175), Supreme Court Decision 95Nu10976 delivered on April 12, 1996 (Gong1996Sang, 1614), Supreme Court Decision 97Nu5367 delivered on February 10, 1998 (Gong1998Sang, 7966) / [2] Supreme Court Decision 88Nu3765 delivered on June 13, 198 (Gong1989, 1082) (Gong1990, 684), Supreme Court Decision 89Nu855 delivered on February 13, 190 (Gong1990, 684) 97Nu539237 delivered on September 26, 197)

Plaintiff and the deceased non-party 1’s lawsuit taking over Plaintiff 1 and one other (Law Firm Square, Attorney Park Jong-jo, Counsel for the plaintiff-appellant)

Head of Yongsan Tax Office

Supreme Court Decision 97Nu2719 delivered on March 13, 1998

Seoul High Court Decision 98Nu8539 delivered on December 29, 1999

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

1. On the first ground for appeal

Pursuant to Article 4(1)3 of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; hereinafter the same "Act"), a debtor's obligation to be deducted from the value of inherited property refers to a debtor's obligation which is deemed certain to be fully borne by the decedent at the time of the commencement of the inheritance. Thus, in cases where the debtor bears a joint and several liability for a third party or is liable as a surety's obligation at the time of the commencement of the inheritance, the debtor shall not perform his/her obligation because the debtor is insolvent at the time of the commencement of the inheritance, and where it is deemed that there is no possibility that the repayment may be made even if the debtor exercises his/her right to indemnity against the principal debtor, the amount of such obligation may be deducted from the value of inherited property (see, e.g., Supreme Court Decisions 88Nu4294, Jun. 27, 198; 95Nu10976, Apr. 12, 1996).

According to the reasoning of the judgment below, since non-party 2 provided 1,2,3 real estate (hereinafter referred to as "real estate of this case") listed in annexed Table 1 List 1 of the judgment below which was part of the inherited property of this case before the commencement of the reorganization procedure of this case before the commencement of the reorganization procedure of this case, the court below held that although the non-party 2 provided 3 real estate as collateral for debts to the financial institutions of non-party 1, 2, and 3 real estate (hereinafter referred to as "the real estate of this case") 1, 50, 300, 300, 199, 300, 300, 199, 400, 199, 199, 400, 195, 196, 194, 250, 196, 196, 30, 196, 40, 196, 196, 305, 146.

In light of the records, the above recognition and determination by the court below is just in accordance with the above legal principles, and there is no error in the misapprehension of legal principles as to the obligation to be deducted from the inherited property value under Article 4 (1) 3 of the Act. The grounds for appeal on this point are not acceptable.

2. On the second ground for appeal

In the case of unlisted stocks with low market value in the evaluation of inherited property, where there is a normal example of transactions that properly reflects their objective exchange value, such transaction value shall be deemed the market value and the value of stocks shall be assessed as the market value. It shall not be assessed by supplementary evaluation methods under Article 5 (5) 1 (b) of the former Enforcement Decree of the Inheritance Tax Act (amended by Presidential Decree No. 12993, May 1, 1990) (see, e.g., Supreme Court Decision 89Nu855, Feb. 13, 1990).

In the same purport, the court below determined that the transaction price is 25,00 won per share, which is the transaction price determined in trading 6,200 share of the non-listed shares of Korea-U.S. Co., Ltd. (hereinafter referred to as the "Korea-U.S.") 6,200 stock after the commencement of the inheritance of this case, based on the relation between the parties to the sale, the time and process of the transaction, the close to the date of the commencement of the inheritance, the close to the date of November 18, 1989, which is assessed by the creditor of the Korea-U.S. on the consideration book (27,704 won) around November 18, 1989, since the objective exchange value is recognized as the transaction price where the normal transaction value is properly reflected, it can be viewed as the market price of shares 98,395 share among the inherited property of this case, and there is no error in the misapprehension of legal principles as to the value evaluation of inherited property as alleged in the grounds of appeal.

3. Therefore, the appeal is dismissed, and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Son Ji-yol (Presiding Justice)