Income from the transfer of trees is not forest income, but income from the transfer of trees, because trees on the ground have not been cultivated to the extent that they have been cultivated.

Even though the trees on the ground is not less than five years in the afforestation period, the income from the transfer of trees is not the forest income, because the forest growing business is not growing to the extent that it is growing.

Article 23 of the Income Tax Act

2015Guhap6255 Revocation of Disposition of Imposing capital gains tax

AA

BB Head of the Tax Office

November 25, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The disposition of the Defendant against the Plaintiff on February 5, 2014, the imposition of the transfer income tax of 2006 o,Oo,oo (including additional tax of o,Oo,oo) is revoked.

1. Details of the disposition;

A. On June 16, 2005, the Plaintiff entered into a sales contract with the ooooo site (hereinafter referred to as “instant land”) consisting of 28 lots of land, such as ooodoo site located within the land transaction permission zone, with the purchase price of 58.5 billion won in neighboring four lots of land (hereinafter referred to as “the instant primary contract”). On December 2006, the Plaintiff changed the said contract and entered into a sales contract with only the instant land as oo billion won (hereinafter referred to as “the instant secondary contract”).

B. On May 31, 2007, the Plaintiff reported and paid the forest income tax on KRW o billion to the Defendant on May 31, 2007 pursuant to the instant secondary contract. When the instant land was cancelled in the land transaction permission zone, the Plaintiff reported the transfer income tax to the Defendant on July 27, 201 with the transfer value of the instant land as o billion.

C. After investigating the tax offense against the Plaintiff, the director of the Seoul Regional Tax Office confirmed the actual transfer value of the instant land as o billion, and deemed that the Plaintiff prepared a false double contract, thereby filing a complaint with the Seoul Central District Public Prosecutor’s Office on September 4, 2013, against the Plaintiff as a suspicion of tax evasion, and notified the Defendant of the taxation data.

D. Accordingly, on February 5, 2014, the Defendant issued a correction and notification of the capital gains tax of 2006 to the Plaintiff (hereinafter “the first disposition”). On April 23, 2014, the Plaintiff dissatisfied with the above taxation disposition and filed an objection on April 23, 2014, but the decision of dismissal was made, and on September 11, 2014, the Tax Tribunal filed an appeal with the Tax Tribunal. In the first instance court of the criminal case as seen below (hereinafter “related criminal case”), “The Tax Tribunal,” even though the actual transfer value of the land in this case was in the original case, it was false that the actual transfer value of the land in this case was KRW 00,000,000 and evaded capital gains tax by reporting it as forest income, it was found guilty that there was a change in the indictment, and thus, the transfer value of the land in this case was subject to the original disposition of o, which included the remaining tax base and tax amount of o (hereinafter “O”). The request for correction was dismissed.

E. Meanwhile, on September 6, 2013, the Plaintiff and the Plaintiff’s Chokdong DD were indicted for a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) for the following criminal facts (Seoul Central District Court Decision 2013Gohap938, 2013Gohap 138, 1338). On February 12, 2014, the court of first instance found all of them guilty, and sentenced DD to the Plaintiff for a suspended sentence of four years, a fine of four billion won, a suspended sentence of imprisonment of three years, and a fine of four billion won, respectively.

On June 16, 2005, the Plaintiff and DD had sold the instant land and the neighboring four parcels of land to o billion to CC, and had revised a contract with the content of adjusting the price to o billion won, excluding the said neighboring four parcels of land, in the subject of sale and purchase around December 2006, and did not separately calculate the value of the trees planted on the instant land and do not constitute the subject of transaction. However, the Plaintiff conspired to evade the transfer income tax by reporting some of the purchase price as forest income in the name of forest trees separately.

Accordingly, around July 28, 2006, the Plaintiff and DD made a sales contract on July 28, 2005 stating the false statement that the total purchase price of the instant land is KRW 32.5 billion and KRW o billion in forest expenses, and filed a separate report on the forest part of KRW o billion as forest income and deducted necessary expenses, etc. The Plaintiff and DD filed a false report on the transfer income tax that sold the instant land to KRW o billion, along with the sales contract on July 28, 2005, which was after the cancellation of the designation of the land transaction permission zone for the instant land.

Accordingly, the Plaintiff and DD, in collusion, evaded capital gains tax corresponding to the difference between the real purchase price cost of oooo,ooo, and oooo that was reported by fraud or other improper means, and the price of land that was reported falsely, ooooo, and oooo.

Accordingly, although the plaintiff, DD, and prosecutor appealed (Seoul High Court 2014No748), the appellate court dismissed all the appeals by the plaintiff, DD and prosecutor on October 23, 2014. The plaintiff and DD appealed appealed (Supreme Court 2014Do14841) but the appellate court dismissed all the appeals by the plaintiff and DD on August 13, 2015, and the first instance judgment became final and conclusive on the same day.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 4, 12, 13, Eul evidence Nos. 4 through 7 (hereinafter referred to as "the number is not indicated separately shall be deemed to include various numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) In a case where a forest tree afforested for not less than five years without their superior as to whether it satisfies the feasibility of growing business and the transfer of trees afforested for not less than five years, it shall be recognized as forest income. Even if not, if the entity of growing business is recognized as the entity of growing business and there is a transfer of forest trees afforested for not less than five years, it shall be recognized as forest income. Even if the entity of growing business is not recognized as the entity of growing business, if there are special circumstances that the forest trees are subject to separate transactions from the forest land, it shall be recognized as forest income. Relevant criminal cases were at issue only on whether a separate transaction object, which is mere auxiliary requirements, was classified into forest income and transfer income, did not determine as forest income. Accordingly, the forest trees planted on the instant land (hereinafter referred to as “forest trees in this case”) were afforested for not less than five years, and thus, the income from the transfer of the forest trees in this case constituted forest income. Moreover, unlike related criminal cases, the Plaintiff constituted the income from the transfer of the forest trees in this case, independent from the instant land.

2) The tax authorities including the Defendant and the Board of Audit and Inspection, upon conducting a high strength tax investigation against the Plaintiff, expressed the public opinion that the Plaintiff’s report of capital gains tax as of July 27, 201 was lawful, but the Defendant issued the instant disposition contrary to the above public opinion, and thus, it is unlawful to have violated the principle of trust protection.

3) Even if the income from the transfer of the instant forest trees cannot be deemed as forest income, the part of the disposition of this case, which corresponds to the above amount, should be deducted from the forest income tax oo,oo,oo, special rural development tax o,oo,oo, ando, which the Plaintiff paid.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether it constitutes forest income

A) Requirements for recognizing forest income

(1) The former Income Tax Act (amended by Act No. 8144 of Dec. 30, 2006; hereinafter referred to as the "former Income Tax Act") defines income accruing from cutting or transferring forest trees in a forest land which has been afforested for not less than five years as "forest income", and unlike real estate transfer income, recognizes necessary expenses deductions as different from the real estate transfer income (Article 23 of the former Income Tax Act) and recognizes necessary expenses by means of estimation by standard expense rate, simple expense expense rate, etc. (Article 143 and 145 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890 of Feb. 28, 2007; hereinafter referred to as the "former Enforcement Decree of the Income Tax Act") and Article 102 of the former Restriction of Special Taxation Act (amended by Act No. 8146 of Dec. 30, 206) stipulates that the amount of tax equivalent to 50/100 of the income tax shall be reduced or exempted.

Therefore, when transferring forest land and forest trees at the same time, it is a matter of whether a taxpayer can recognize forest income under any requirement, because there are more favorable cases where it is more favorable for a taxpayer to deduct necessary expenses with respect to the transfer value of forest land, by dividing the transfer value of forest land into the transfer value of forest land, by the transfer value of forest land, by the transfer value of forest land, and by paying the forest income tax after deducting necessary expenses with respect to the transfer value of forest land, and by using the method of evading transfer income tax.

(2) The former Income Tax Act and the former Enforcement Decree of the Income Tax Act do not stipulate that “the income accruing from the cutting or transfer of trees in a forest land, the period of afforestation of which is not less than five years is not specified.” However, considering the fact that the forest trees in a forest land are not, in principle, the constituent parts of the forest land and are not the objects of independent transactions (Article 99(1) of the Civil Act), it should be recognized that the forest trees are included in the forest land subject to transfer in order to separate the income from the forest land if the forest land and the forest trees are transferred simultaneously, and that the forest trees are transferred as an independent object of transaction separate from the forest land. In other words, if the forest land is transferred in the absence of such circumstances as where the forest trees are publicly announced by the registration of standing trees or by the method of scenic name, etc., it shall be ordinarily deemed that the forest land, which is the fixtures of the forest, is a part of the forest land, and even in such a case, it shall not be recognized as the forest income without any restriction.

(3) Ultimately, if forest land and forest trees are transferred at the same time, in order to be recognized as forest income, the fact that “the forest trees were transferred between the parties as the object of independent transaction separate from forest land” should be acknowledged as the content of the transfer contract. After that, it is logical order to grasp whether there is the circumstance that “the forest trees, which are part of the transfer contract, were transferred for more than five years, in order to ascertain whether the transfer of forest trees constitutes forest income.” Thus, if forest land and forest trees are transferred at the same time, if it is not recognized that the forest trees were transferred as the object of independent transaction separate from forest land, the total transfer value is merely the real estate income and the value equivalent to the objective value of the forest trees cannot be deducted from the transfer income.

Meanwhile, as amended by Act No. 8144 of Dec. 30, 2006, the Income Tax Act integrated into business income by deeming that there exists no separate benefit from classification in the case of forest income. The Supreme Court Decision 201Du6493 Decided September 13, 2013, which rendered following the amendment of the Income Tax Act, is reasonable to deem that only the income generated from the transfer of forest trees, in principle, falls under business income, and only the remaining income generated from the transfer of forest land is subject to taxation on the transfer of forest land. In such a case, whether the income generated from the transfer of forest trees constitutes business income should be determined in accordance with social norms by comprehensively taking into account whether the forest land was created for the purpose of generating the forest trees and its substance, size, period, mode, etc. Even if the forest land was transferred with the forest land, the determination of whether the forest land was subject to taxation on the transfer of the forest land is not subject to separate transfer, and whether the forest land was not subject to taxation on the forest land.

(4) Whether the forest trees have been transferred as an object of independent transaction shall be determined by comprehensively taking into account the following: whether the forest trees have been publicly announced by means of registration of standing trees or the name and title of the trees; whether the sales contract explicitly states the quantity of the forest trees or the relation of rights; whether the value of the forest trees has been assessed separately from the forest land; whether the method of evaluation is appropriate; whether the seller has obtained authorization of the forest management plan under the Act on the Creation and Management of Forest Resources; and whether the buyer actually needs the forest trees.

B) the facts of recognition

(1) The first written contract of this case does not stipulate that all trees are traded separately, but rather, Article 5(2) provides that “All obstacles shall be liable for and at the expense of theCC.”

L. The second contract in this case states that "the ownership of obstacles that have been processed at the responsibilities and costs ofCC shall belong toCC." The items of forest trees are added to the second contract in this case, but the specific quantity, variety, size, and value assessment of forest trees are not stated.

(2) On the other hand, on June 21, 2005, after the conclusion of the first contract of this case, it was first mentioned that the tax accountant E separately set the o billion won in the "Detailed Statement of Calculation of Transfer Income Tax," which was sent by facsimile to the plaintiff, but according to this, the o billion won in the o.o.o.o.o.o.o.o.o.o.o.o.o.o.o.o.o.o.o, a total of the purchase price of the land of this case was paid to the certified tax accountantF on October 7, 2006 without providing the specific value appraisal data of the forest item of this case.

(3) The Plaintiff and DD shall maintain in the first instance court of the relevant criminal case the land of this case in 2004.

The plan and a written authorization (Evidence 6-3 to 5 of A) were submitted, and the court of appeal presented a "report on the feasibility of the use of trees in the odong project site (Evidence 17 of A), which contains the content that if the forest trees of this case were used as landscape trees, it may be expected to reduce the cost of at least KRW o00,000,000."

(4) GGG, the actual owner ofCC, was stated in relevant criminal cases, etc. as follows.

�� 2013. 9. 8.자 검사 작성의 제4회 참고인 진술조서(을 제8호증의2)

There are a lot of low-income land at the end of the instant land, and there is no precedent including forest trees, and since there is no reason to do so, since there is no increase in the development charges to be borne by low-income amount as the price of the land is reduced if forest trees are entering the land zone.

�� 2013. 12. 6.자 제1심증인신문조서(을 제9호증의1)

There is no awareness about the forest o billion won.

The second contract of this case is not owned byCC, and is only a contract with DDR.

SinceCC purchases forest land for an urban development project without requiring forest trees, it is naturally included in forest trees, there is no fact that forest trees are purchased separately, and there is no fact that forest trees are calculated separately for forest trees prices.

When purchasing the land in this case for the initial apartment sale business, I thought that the forest trees in depth on the ground were transferred to the apartment complex, and that it could not do so because the expenses were not full, and the rest was examined about about about to sell, and there was a place where o0 million won was discussed.

��2014.9.16.자 제2심증인신문조서(갑제15호증, 을제9호증의1)

It is a false statement that the plaintiff stated that he did not know about 12 billion won for forest trees in the first instance trial, and that he did not have a contract design only because he stated that he did not do so.

�� 2014. 11. 3.자 피의자 진술조서(을 제9호증의4)

It is true that testimony was made by investigation agencies and the first instance court, and the part of testimony made by the appellate court is perjury.

Although the appellate court rendered a false statement in favor of the plaintiff and the former in favor of the plaintiff, the appellate court judged that it is difficult to maintain the false statement of conscience any longer, and that the plaintiff and the former in favor of the plaintiff should no longer bear the burden, thereby making the true statement.

At the time of the preparation of the second contract of this case, o0 billion won out of the purchase price o0 billion won was falsely appropriated as the expenses of the o0 billion won at the request of the plaintiff and DD.

In fact, the opinion that the forest cost and the forest trees cost should be separately calculated was first discussed from the plaintiff and DD at the time of the preparation of the second contract of this case, and the appellate court stated that there was a talk that the forest trees cost should be separately calculated from the initial stage of the contract of this case, and that there was a false statement in the appellate court that the forest trees cost should be separately calculated when the contract of this case is concluded.

Around February 6, 2004, the principal applied for approval of a forest management plan for the instant land at the Plaintiff’s request and paid KRW o0,000 for 10 years, not for the appropriation of forest trees, but for the purpose of reducing the amount of tax imposed on the instant land subject to sale after being assessed for non-business purposes other than non-business purposes. At this time, there was no discussion on forest trees at this time, and it is irrelevant to the calculation of forest trees.

The plaintiff and DD submitted a written report on the validity of tree utilization (Evidence A 17) to the appellate court, and it is difficult to find out whether the report on the validity of tree utilization itself is a report on the validity of tree utilization submitted to the relevant department at the time.

After the end of the first instance trial, contact from DD has been satisfyed, and it continued to have made a false testimony to the author, and DD continued to have tried to make a leading question as if DD had made a false testimony, and it was found that DD recorded a conversation with dD on a mobile phone in the process, and that dD will have tried to submit it to the appellate court after recording the conversation with dD to the author, as if dD had made a false testimony at the first instance trial, and as dD has made a false testimony at the first instance trial, dD recorded that dD had recorded that conversation with ddd and recorded that conversation at the request of dD.

The statement in the first instance court that the price of the forest trees is 2.6 billion won is the sum of the forest trees other than the forest trees of this case and the land trees other than the forest trees of this case after the preparation of the first and the second written contract of this case was proposed to purchase o0 billion won.

On July 9, 2014, at an attorney office, DD and the Plaintiff had been sentenced to a fine at the court of first instance for a long time due to the lack of money to be paid upon confirmation of the judgment of the court of first instance, and therefore, the Plaintiff did not agree with the appellate court to reverse the existing statement and make a statement favorable to himself/herself. In addition, on September 14, 2014, the court held a meeting as to the testimony to be made in the appellate court at the same office.

�� 2014. 11. 26.자 피의자 진술조서(을 제3호증)

On July 9, 2014, at the office of HH attorney-at-law, the Plaintiff, DD and HH attorney-at-law were asked to give testimony in favor of the Plaintiff, DD and HH attorney-at-law.

On September 14, 2014, HH attorney-at-law tried to know about the gist of the question as a preliminary practice for testimony at HH attorney-at-law office.

The forest trees expenses have been discussed before the towing times, and the forest trees expenses may be o0 million won, but o0 million won has been emphasized.

Since then on September 9, 2015, GG was issued a summary order of KRW 3 million on the charge that the second instance court of the relevant criminal case committed perjury, and this summary order was finalized on September 24, 2015.

(5)CC purchased the instant land from the Plaintiff and provided it as security to the financial institution, and planned to use the instant land as an apartment development project site.

(6) In around 2002, the Plaintiff sold land, such as o-o, o-o, o-o, o-o, and o-o, located in the vicinity of the instant land, the Plaintiff (as part of the above land, o-o, o-o, o-o, and the JJ shared by the Plaintiff and the JJJJ). The Plaintiff and the JJJ reported and paid only the transfer income tax to the tax authority regarding the transfer of the above land, and did not separately report and pay the forest income tax.

(7) GG purchased o-o and o-o and o-o and 10 lots, located in the vicinity of the instant land, through KK, another company it operates, from around 2006, o-o and o-o and 10 lots, o-o and o-o and 10 lots, located in the vicinity of the instant land. The average trading unit price per 1 square meter of the instant neighboring land was o-o and o-O (No. 12).

[Ground of Recognition] Facts without dispute, Gap evidence 6-3 through 5, Eul evidence 14 through 17, Eul evidence 3, Eul evidence 8-2, 3, Eul evidence 9-1, 4, 5, Eul evidence 10, 12, 16, 17, 20 through 22, and the purport of the whole pleadings and the purport of the arguments

C) Determination

In full view of the following circumstances revealed in light of the above facts acknowledged, since the Plaintiff andCC cannot be deemed as a separate transaction subject to the instant forest trees upon entering into the instant secondary contract, the Plaintiff’s assertion on this part without any need to further examine the remaining requirements of forest income.

① The instant first contract does not include the content that the instant forest trees are traded by classifying them, but rather, Article 5(2) provides that all obstacles shall be treated as the responsibility and cost ofCC. Therefore, it cannot be deemed that the instant forest trees were separately traded under the prestigious name.

② Although the instant secondary contract provides zero billion won, the specific quantity, variety, size, and value assessment of the forest item is not indicated as to the specific quantity, variety, and value assessment of the forest item. It is deemed that theCC purchasing the forest did not make a specific evaluation or investigation on the said item, while paying a large amount of KRW o00,000, constitutes a situation where it appears that there was no intention to separately regard the forest item as an object of transaction.

③ Around October 2006, around 2 months prior to the conclusion of the instant secondary contract, DD had calculated the tax amount that may be imposed in the case of calculating the forest trees as KRW o billion, KRW o00, and KRW o00,000. On November 7, 2006, DD also had a camera with the purport that the forest trees would be KRW o0,000 or KRW o00,000,000, without assessing the value of the instant forest trees before the conclusion of the instant secondary contract. As such, as long as the Plaintiff arbitrarily adjusted the appraised value of the instant forest trees to calculate the tax amount before the conclusion of the instant secondary contract, it is difficult to view that the instant forest trees were actually traded as the actual subject matter.

④ In addition, in light of the statements made on November 3, 2014 by the Plaintiff, the “report” (Evidence A17) submitted by the Plaintiff is a material that was submitted to the appellate court of the relevant criminal case, and it is difficult to verify whether the document was prepared at that time and how the preparation was made, and whether the document was prepared. It is difficult to confirm whether the content of the report is appropriate because there were no grounds for the judgment that “if the document is used as a tide, it is possible to expect to reduce the cost of at least a million won.” In addition, in light of the Plaintiff’s statements made on November 3, 2014, the written forest management plan and the written authorization (Evidence A6-3 through 5) for the land of this case submitted by the Plaintiff is not the Plaintiff, but the Plaintiff, which was applied at the City, for the purpose of reducing the tax amount after acquiring the land in this case as the land for business purpose.

⑤ SinceCC intended to obtain a loan on the instant land as collateral and there was a reason to set the purchase price for the instant land as much as possible, it did not have any reason to reduce the purchase price for the instant land. As it was intended to use the instant land as an apartment development project site, there was no need to purchase the instant forest separately.

6) The Plaintiff sold neighboring land, the same as the instant land in around 2002, on which trees were created, to III Co., Ltd., and did not separately report the forest income for the trees to the tax authority.

7) GG purchased the neighboring land of this case from around 2006, around 3 and LLL, which was at the time of the second sale contract of this case. The average trading unit price per square meter of the neighboring land of this case is against oo,oo, and the average trading unit price per square meter of the neighboring land of this case is calculated as o,oo (i.e., oo, ooooo, ooooooo) if the purchase price is KRW o0 million. In other words, if the forest trees of this case were purchased in oo,oo, ooooo, oooooooo, ooooooo, oooooo, in light of the transaction circumstances at the time, it appears that the purchase price is close to 3 times and that the second sale contract of this case is difficult to understand in light of the transaction conditions at the time.

In addition, GG does not seem to have separately paid the tree expenses to Co., Ltd. III and LL while purchasing the neighboring land of this case.

8. Most of all, GG made a statement in the investigation agency and the first instance court of the relevant criminal case, and made a false statement in the second instance, and as a result, GG was punished for perjury. The forest trees in this case were not traded and the forest o billion won was not separately calculated, and the credibility of the statement in the investigation agency and the first instance court is high.

2) Whether the principles of trust protection are violated

A) In order to apply the principle of the protection of trust in administrative legal relations, first, the administrative agency should name the public opinion that is the object of trust to the individual, second, the administrative agency's trust should be the value of protection because it is not attributable to the individual with respect to the trust of the individual, and third, the individual should have trusted the opinion list and have engaged in any act. Fourth, by the administrative agency's disposition contrary to the above opinion list, the individual's trust in the opinion list should be infringed upon. When meeting these requirements, the administrative agency's disposition is against the principle of the protection of trust (see, e.g., Supreme Court Decision 93Nu5741, Sept. 10, 1993).

B) The Plaintiff cannot be deemed to have expressed a public opinion that the tax authority, the tax authority, and the Board of Audit and Inspection conducted a high strength tax investigation on the Plaintiff and did not impose any disposition on the Plaintiff regarding the Plaintiff’s report of capital gains tax as of July 27, 2011. Thus, this part of the Plaintiff’s assertion is without merit, without examining the remaining requirements.

3) Whether the amount of tax payable is deducted

As alleged by the Plaintiff, even if the Defendant did not deduct the forest income tax oo,oo,oo, special rural development tax oo,oo, andoo that was paid by the Plaintiff while taking the instant disposition as alleged by the Plaintiff, such circumstance alone does not make any other tax item inappropriate for the reason that the disposition of this case is inappropriate. The Plaintiff appears to have filed a separate application for refund to the Defendant or resolved it through a lawsuit for return of unjust enrichment. Therefore, this part of the Plaintiff’s assertion is without merit.

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.