Daegu District Court 2010Guhap407 (2011.06)

early 209Gu2351 ( November 25, 2009)

It is recognized that real estate was donated after the title trust is terminated.

Since it is reasonable to deem that real estate was acquired by 1/2 shares and owned by another person, and it was donated to the spouse, gift tax is imposed on the donee. The disposition imposing capital gains tax on the title truster by deeming that the portion of the donor’s obligation related to donated property was transferred at a cost is legitimate.

Article 14 of the Framework Act on National Taxes

2011Nu1765 and revocation of disposition of imposing gift tax and capital gains tax.

Park XX

EO and one other

Head of the Tax Office

Daegu District Court Decision 2010Guhap407 Decided July 6, 2011

June 29, 2012

July 20, 2012

1. All appeals by the plaintiffs (appointed parties) and plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiff (Appointed Party) and the Plaintiffs.

1. The plaintiff (Appointed Party) Park Dong;

The judgment of the first instance is revoked. The defendant's disposition of imposition of capital gains tax of KRW 000 on April 14, 2009 against the plaintiff (appointed party; hereinafter referred to as the "Plaintiff") and the imposition of KRW 000 on the Selection KimB on April 14, 2006 shall be revoked in all.

2. Plaintiffs ECC and ParkD

The judgment of the first instance court is revoked. The defendant's imposition of KRW 000 on April 2, 2009, gift tax of KRW 000 on 2006, gift tax of KRW 000 on 2007, and gift tax of KRW 000 on April 3, 2009, respectively, and the imposition of KRW 000 on Plaintiff ParkD on April 3, 2009 (thisCC and ParkD sought revocation of each of the above imposition dispositions from the warden on April 7, 2009, but appears to be a clerical error).

1. Details of the disposition;

The following facts may be acknowledged if there is no dispute between the parties, or if Gap collected the purport of the whole pleadings in the descriptions of evidence Nos. 3-1, 2, 1, 3-2, 2, 20, 1, 1, and 3-2, 1, 20, 1, 1, 2, and 3-3, respectively.

A. The registration of ownership transfer was completed on December 23, 2002 with respect to the land and buildings listed in the attached Table 2’s list of real estate (hereinafter collectively referred to as “instant land,” “the instant building,” and the combination of the instant land and buildings, “the instant real estate,” and on May 26, 2006, in relation to each of 1/2 co-ownership shares among the designated parties, KimB (the wife of the Plaintiff Park Jong-B (Plaintiff ParkB) and the Plaintiff CC (the wife of Plaintiff ParkD).

B. After conducting a tax investigation, the Defendant: (a) each of the dispositions that the Plaintiff Park Dong and Park DoD held on title trust with the ParkE on May 26, 2006; (b) deemed that the title trust was terminated on May 26, 2006; (c) on April 2, 2009, the Plaintiff issued to thisCC a gift tax of KRW 000, and KRW 000,000, and KRW 00,000,000,000,000,000,000,000,000,000,000,000,000,000, won for the transfer income tax of April 3, 2009 (hereinafter collectively, the “instant disposition 1,00,000,000,000,000,000,000,000,000 won for each of the instant real property (the same shall apply).

2. Whether the first and second dispositions of this case are legitimate

A. The plaintiffs' assertion

The plaintiff thisCC and ParkD asserted that the disposition of this case was unlawful since it was based on misunderstanding of facts, since "the entire real estate of this case was nominal trust of the plaintiff Park Dong as the actual owner, and it was not the actual owner of the 1/2 shares of the 1/2 shares of this case, or the nominal owner, or the trustr, of this case, the plaintiff Park Dong-CC acquired the 1/2 shares of the real estate of this case from Park Dong-D and did not have been donated from Park Dong-D."

On the other hand, the plaintiff Park Jong-chul merely held the title trust of all of the real estate of this case with Park Jong-B as the actual owner, and it is not the actual owner or the title truster of the 1/2 shares of the 1/2 shares of this case. The registration under the name of the Selection KimB was made by the plaintiff Park Jong-B to the Selection KimB, and it is not a donation by the plaintiff Park Jong-B. Thus, the disposition of this case was unlawful on the ground of misunderstanding of facts. Even if the title trust and donation by the plaintiff Park Jong-A are recognized, the part of the disposition of this case, which calculated the amount of gift tax under the premise that the Selection KimB acquired 1/2 shares of the secured debt of the secured debt of this case, which was established on the real estate of this case at the time of transfer of 1/2 shares of this case, was unlawful.

(b) Related statutes;

Attached 3 is as stated in the "related Acts and subordinate statutes".

(c) Fact of recognition;

If Gap evidence 4 through 7, 13, 15, 16, 28 through 31, 34, 36, Gap's evidence 8, 9, 12, 18, 21, 33, 37, 38-1, 6, 11, 12, 19, 24 through 27, 31, 15, 18, 30-1, 30, 4 or 5-1, 5-3, 5-1, 5-1, 3-1, 5-1, 3-1, 4-1, 5-1, 5-1, 5-1, 5-1, 3-1, 5-1, 3-1, 5-1, 3-1, 28-2, 32, 38-1, 37, or 4-1, 5-1, 5-1, 17, or 4-1, respectively.

(1) Plaintiff Park Jong-A established and operated Kim H and Dong business, XX corporation (hereinafter referred to as “non-party corporation”). around February 200, Plaintiff Park Jong-D received KRW 000 from Plaintiff Park Jong-D to raise funds for the operation of the non-party company, and then Plaintiff Park Jong-D received money as the adviser of the non-party company and paid a certain monthly amount of money.

(2) From February 200 to September 2007, Plaintiff Park Poe-D took part in the management of the non-party company while continuing the transaction of lending money to Plaintiff Park Jong-A or the non-party company through the deposit account of the National Bank (hereinafter “National Bank”) in the name of Plaintiff Park Jong-A, Inc. (hereinafter “National Bank”).

(3) On November 2002, the FF officer in charge of the accounting of the non-party company conducted an investigation into the purchase price of the instant real estate according to the Plaintiff’s branch office, and excluded loans, security deposits, etc., the FF reported the necessity of KRW 000, and used the purchase price, etc. after receiving KRW 000 from Plaintiff ParkD, and issued the registration certificate of the instant real estate to Plaintiff ParkD.

(4) The owner’s prior owner of the instant real estate prepared a confirmation of the fact that “A or A No. 29-2 was drafted after negotiating the sales contract, including the determination of the purchase price, with the Plaintiff Park Jong-A, among the Plaintiff Park Jong-A-D’s observations, that the Plaintiff had not met Park Jong-A-D prior to the sales contract.”

(5) In the course of the tax investigation, ParkE received a title trust of the instant real estate through the introduction of the Plaintiff Park Jong-A, and only the actual owner of the instant real estate from the Plaintiff Park Jong-A was the Plaintiff Park Jong-A.

After that, Plaintiff Park Do-D and Plaintiff Park Ga-A requested the termination of title trust of the instant real estate, and stated that Plaintiff Park Do-B transferred the first/2 shares of the instant real estate in the name of the selector KimB was the same that Plaintiff Park Do-A has the shares in the instant real estate.

(6) On December 23, 2002, the National Bank of Korea, the debtor Park E-E, and the maximum debt amount of the instant real estate were set up and used as the purchase fund of the instant real estate after a loan of KRW 000 in the name of Park E-E. The interest on the said loan was paid by Park E-E for the interest on the said loan.

(7) After the real estate in this case was transferred to KimB on May 26, 2006 through the joint ownership of the Plaintiff, the right to collateral security was established on September 1, 2006 with respect to the entire real estate in the instant case, which was KRW 000 in the name of the Appointed KimB at the National Bank on September 4, 2006. The right to collateral security was created on September 1, 2006, and the right to collateral security was created on September 4, 2006. The above loan in the name of ParkE was repaid with the loan, and the establishment registration of collateral security was cancelled on December 23, 2002.

(8) On September 2007, Plaintiff CC and Selection KimB sold the instant real estate to KimL, and Plaintiff CC received a transfer registration of its ownership shares on September 28, 2007, but the selected KimB made a provisional registration on October 4, 2007 with respect to its ownership shares on a pre-sale basis, but completed the transfer registration of ownership on March 4, 2009.

(9) After purchasing the instant real estate, KimL issued a loan from the KK Agricultural Cooperative on September 4, 2008, to a national bank under the name of the Selection KimB to repay the above KRW 000 loan, and then cancelled the registration of establishment of a neighboring bank of the national bank on September 1, 2006 on the instant real estate.

(10) In the first instance court, KimL’s husband’s husband purchased the instant real estate at the Plaintiff’s recommendation, and determined the purchase price with Plaintiff Park DoD and paid the purchase price to Plaintiff Park DoD. The Plaintiffs and the selected KimB entered into the instant real estate purchase contract under the name of Plaintiff Kim LL, and stated that the registration transfer documents was received from Plaintiff Park DoD.

(11) The Plaintiff Park Jong-A continued to engage in the transaction of the entry and exit of funds related to the instant real estate through the deposit account in the National Bank of Korea, which was engaged in money transaction with the Plaintiff Park Jong-D. On January 21, 2003, the Plaintiff Park Jong-A paid KRW 000 of the acquisition tax on the instant real estate on April 1, 2003, the Plaintiff paid KRW 000 of the underground deposit money for the instant building to the lessee Park Jong-M on December 22, 2003, and paid KRW 00 of the fire insurance premium on the instant building on February 21, 2004 at the repair cost of the instant sprinkler. The Plaintiff Park Jong-A paid KRW 00 on August 20, 2005 to the lessee of the 1st floor of the instant building, and paid KRW 00 of the transfer income tax on the instant real estate on August 30, 2005.

(12) On December 2002, KimP, who leased and operated the bowling site in the instant building from the former owner’s authorizedO (hereinafter referred to as “the instant bowling site”), was aware that the Plaintiff succeeded to the lease relationship with the authorizedO by purchasing the instant building from the GamA and transferring the instant bowling site to the deposit account of Plaintiff LamA, while operating the instant bowling site and settling the Plaintiff with the GamA around February 2005.

(13) From September 2005, Plaintiff ParkD and thisCC registered the instant bowling in the name of the PlaintiffCC and operated the instant bowling. On September 2005, 2005, the Plaintiff ParkJ received contact from Plaintiff Park DomD from the Plaintiff and got work at the instant building bowling site, and reported the details of the daily income settlement of the Plaintiff Park CC every day after receiving monthly wage from Plaintiff Park DomD.

(14) From July 2006, the real estate in this case was owned by Plaintiff LeeCC and SelectionB, and since July 2006, Plaintiff LeeCC and SelectionB jointly registered the business and operated the instant bowling site.

(15) 선정자 김BB은 2006. 10. 10. 이 사건 건물 중 195평을 갈QQ에게 보증금 000원에 월세 000원으로 정하여 임대하였다(을가 제7호증)

(16) SDR leased 'OO' restaurant on the first floor of the instant building, and around February 2006, upon entering into a provisional contract with the Plaintiff Park Dod and paid KRW 000 to the Plaintiff Park Dod and on May 26, 2006, the instant building became co-owned by the Plaintiff thisCC and the Selection KimB, and entered into this contract with the Plaintiff Park Dod and Park Dod and ParkB.

(17) In the course of the tax investigation, Plaintiff CC and the Selection KimB stated that “The developments leading up to the registration of ownership transfer with respect to the shares of 1/2 of the instant real estate in its own name, including the source of money, was dealt with by Plaintiff BaD or Plaintiff YB, the husband of the instant real estate.”

D. Determination

(1) If a title truster transfers real estate to a third party and income from such transfer was attributed to the title truster, the person liable to pay the relevant capital gains tax under the principle of substantial taxation under Article 14(1) of the Framework Act on National Taxes is not the person liable to pay the relevant capital gains tax, who is the subject of the transfer, does not become the person liable to pay the said tax (see, e.g., Supreme Court Decision 96Nu6387, Oct. 10, 197).

In the instant case, the following circumstances revealed in the facts of recognition under paragraph (c), i.e., (i) Plaintiff Park Do and Plaintiff Park Parkb has continued to engage in monetary transactions with respect to the non-party company for a long time, and actually operated the non-party company as a Dong business (the non-party employee Lee F, at the court of first instance, testified that the non-party company was a Dong business relationship). (ii) Plaintiff Park DobD purchased the instant real estate with the instructions and funds of the court of first instance; (iii) Plaintiff Park Jong-A decided important matters concerning the purchase of the instant real estate, such as the purchase price decision; (iv) Plaintiff Park Dog paid the instant real estate at its own account after the purchase of the instant real estate; (iv) Plaintiff Park Dog paid the instant real estate to the lessee; and (v) managed the instant real estate with its own funds; and (v) the Plaintiff Park Dog's right to acquire the instant real estate under the name of the non-party Kim Dog, which appears to have been the transfer of the instant real estate.

(2) Furthermore, as seen earlier, the Selected KimB donated 1/2 shares of the instant real estate and used to repay ParkE’s existing loans by borrowing 000 won of the secured debt of the right to collateral security established on the instant real estate under its name. However, as seen earlier, the Plaintiff CC and the Selected KimB shared 1/2 each of the instant real estate, as seen earlier, the Plaintiff’s co-ownership share in the instant real estate was loaned, and all of the loans were used to repay ParkE’s existing loans, and KimB purchased the instant real estate, and KimL acquired 00 won of the loan in the name of SelectionB in lieu of the payment of the purchase price, and thereafter, after the repayment of the total amount of the national bank loans in the name of KimB, and then cancelled the registration of the establishment of the mortgage. As such, the portion of the instant real estate loan that was actually acquired by the Plaintiff 1,300 million won under the name of the Plaintiff 1,200 million won and the Defendant 1,3200 million won was claimed.

(3) Therefore, both the first and second dispositions of this case are legitimate, and the plaintiffs' assertion is without merit.

3. Conclusion

Therefore, the judgment of the first instance that dismissed all of the plaintiffs' claims of this case is just and there is no ground to appeal by the plaintiffs. It is so decided as per Disposition.