Where it is difficult to calculate the market price, the value shall be calculated according to the supplementary evaluation methods.

Even if there are examples of transactions, if it is not a price formed by normal transactions that properly reflects the objective exchange values of donated property, the supplementary evaluation method shall be applied.

Article 60 of the Inheritance Tax and Gift Tax Act

Article 63 of the Inheritance Tax and Gift Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of gift tax of KRW 116,125,370 against the Plaintiff on August 7, 2007 is revoked.

1. Details of the disposition;

A. The Seoul ○○○○○○ System (hereinafter “Non-Party Company”) issued 50,00 shares of the existing shares on October 11, 2001 according to the resolution of the board of directors’ capital increase with respect to new shares issued on September 11, 2001, and allocated 50,000 shares of common shares (the face value of KRW 5,000 per share) to the existing shareholders, but among them, 36,00 shares were forfeited. On October 11, 2001, the Plaintiff acquired 31,000 shares out of the above forfeited shares (hereinafter “instant shares”).

B. On November 2, 2001, the non-party company issued 6,000 common shares (the face value of 5,000 won per share). Of them, the non-party company acquired 3,000 common shares at KRW 50,000 per share.

C. On October 11, 2001, the director of the Central Regional Tax Office calculated the value per share before the capital increase by 124,290 won according to the supplementary assessment methods stipulated in Article 63 of the Inheritance Tax and Gift Tax Act (the Act regardless of whether it was before or after the amendment), and Article 54 of the Enforcement Decree of the Act, the value per share after the capital increase is calculated by 64,645 won [64,645 won per share [5,00 won per share before the capital increase by 124,290 won), [5,00 won per share before the capital increase by 5,00 won increase by 5,00 won per share)] + (5,00 won per share by 5,00 won increase by 5,00 won per share), and notified the Plaintiff on May 29, 2007 that the value per share be donated to 564,654,6546,50 per share and 50 won per share].

D. On Nov. 2, 2001, the Plaintiff acquired 3,000 shares of the non-party company on Nov. 2, 2001, which was within 3 months from the date of acquiring the Plaintiff’s shares. Thus, on July 2, 2007, on the ground that it constitutes the market price of the shares as of the above 50,000 won donation date, the Plaintiff considered the remaining 45,000 won after deducting 5,000 won, which is the value acquired by the Plaintiff from the above 50,000 won, as the deemed donation price per share, and reported and paid the gift tax base and tax amount on this basis.

E. On October 11, 2001, the date of donation to the Plaintiff on August 7, 2007, the Defendant imposed KRW 116,125,370 on the gift tax amount equivalent to KRW 453,95,00 (= KRW 14,645,00 on the deemed donation amount per share as calculated earlier - the deemed donation amount of KRW 59,645 per share reported and paid by the Plaintiff - KRW 45,00 on the deemed donation amount of KRW 453,95,00 (= 14,645, X31,00) (hereinafter “instant disposition”).

[Based on Recognition] A without dispute, Gap evidence 1 through 3, Gap evidence 4-1 through 9, Gap evidence 6, 7, Gap evidence 8-1, 2, Gap evidence 9 through 12, Eul evidence 1-1 through 9, Eul evidence 2 and 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 60, the main sentence of Article 39(1), and Article 39(1)1(a) of the Act stipulate that the market price as of the date of donation shall be calculated on the basis of the market price. However, Article 39(1)1 of the Act and Article 29(3)1 of the Enforcement Decree of the Act stipulate that the market price shall not be calculated when the issue price is lower than the market price, and the value of the donated property shall be calculated on the basis of a separate calculation method, instead of calculating the value of the donated property. This is inconsistent with the provisions of Article 60 of the above Act, which stipulate that the value of the donated property shall be calculated on the basis of the market price, and each of the above provisions, which requires the calculation of the value of the donated property by a separate calculation method, is unconstitutional, contrary to the principle of equality, property rights and restriction

On October 2, 2001, the Plaintiff acquired the shares of the non-party company at KRW 50,000 per share of ○ Development Finance Co., Ltd., which was not related to the non-party company, within three months from October 11, 2001, and thus, the above KRW 50,000 falls under the current market price on the donation date. Therefore, on the basis of the above KRW 50,000, the value of donated property for the shares of this case should be calculated based on the above KRW 50,00, the Defendant calculated the value of donated property pursuant to the main sentence of Article 39(1)1 of the above Act and Article 29(3)1 of the Enforcement Decree of the Act, which is unconstitutional merely because the shares were issued at a price lower than the market

(b) Related statutes;

The entry in the attached Form is as shown in the statutes.

C. Determination

(1) Article 39(1)1 of the Act provides that if a shareholder of the relevant corporation issues new stocks at a price lower than the market price, he/she shall be deemed to be donated property. Article 39(1)1 of the Act provides that if a shareholder of the relevant corporation gives up his/her right to receive new stocks, he/she shall allocate the forfeited stocks, the benefits that the person who received the allocation of forfeited stocks gains by giving up his/her right to receive the allocation of forfeited stocks shall be deemed to be a kind of certain gains provided for in Article 39(1)1 of the Act. Article 29(3)1 of the Enforcement Decree of the Act provides that the method of calculating the market price of donated stocks under Article 39(1)1 of the Act shall be prescribed in Article 39(1)1(a) of the Act. In order to calculate the market price of donated stocks, the market price of donated stocks shall be calculated based on the market price calculated based on the supplementary method in lieu of the market price (Article 60(1) of the Act).

(2) On November 2, 2001, the Plaintiff sought revocation of the instant disposition on the premise that KRW 50,000 falls under the market price of the instant shares as of the date of donation, on the ground that ○○ Development Finance Co., Ltd. acquired KRW 3,000 per share of Nonparty Co., Ltd. at KRW 50,000 per share. Therefore, the Plaintiff’s above KRW 50,000 constitutes the market price of the instant shares as of the date of donation

Article 60(1), (2), and (3) of the Act stipulate that the market price of the property on which gift tax is levied is based on the market price as of the date of donation. Here, the market price includes the price which is generally recognized as a transaction between many and unspecified persons and which is recognized as the market price under the conditions as prescribed by the Presidential Decree, such as the expropriation, public sale price, appraisal price, etc. Where it is difficult to calculate the market price, the market price shall be based on the valuation method prescribed in Articles 61 through 65 in consideration of the type, size, transaction situation, etc. of the relevant property. Article 63(1)1 (c) of the Act provides a supplementary valuation method for calculating the market price in cases where it is difficult to calculate the market price of unlisted stocks. Article 49(1)1 of the Enforcement Decree of the Act provides that "The market price is recognized as the market price under the conditions as prescribed by the Presidential Decree, such as expropriation, public sale price, appraisal price, etc." Article 60(2) of the Act provides that the market price of the property is objectively determined under Article 10(4) of the Act.

As seen earlier, the public health department and ○○ Development Bank acquired new shares of the non-party company at a time not exceeding 50,000 won per share from October 11, 2001, which is the date of donation of the instant shares. However, in order to make the price of the instant shares to be the market price of the instant shares, there must be a fact of sale and purchase of shares equivalent to the instant shares. ○○ Development Bank Co., Ltd. has separately acquired new shares to increase its capital, not the shares having the same value as the instant shares, to which the non-party company acquired shares to increase its capital; when the value of the new shares is deemed to be the market price of the shares, the deemed donation price is always deemed to be the market price formed by appropriately reflecting the objective exchange value of the instant shares, and thus, it is difficult to view the above 50,000 won to be the normal market price established by the Plaintiff’s offering method under the premise that the Plaintiff’s offering price of the instant shares constitutes “the market price of the instant shares.”

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.